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PRIVATE SECTOR DEVELOPMENT HUB THE COMPETITIVENESS OF THE ETHIOPIAN MANUFACTURING INDUSTRY BACTECPLC., CONSULTING ENGINEERS, ECONOMISTS June 2009 Addis.

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Presentation on theme: "PRIVATE SECTOR DEVELOPMENT HUB THE COMPETITIVENESS OF THE ETHIOPIAN MANUFACTURING INDUSTRY BACTECPLC., CONSULTING ENGINEERS, ECONOMISTS June 2009 Addis."— Presentation transcript:

1 PRIVATE SECTOR DEVELOPMENT HUB THE COMPETITIVENESS OF THE ETHIOPIAN MANUFACTURING INDUSTRY BACTECPLC., CONSULTING ENGINEERS, ECONOMISTS June 2009 Addis Ababa

2 The manufacturing sector in the Ethiopian economy: –< 5% of GDP in 2007/08 : Large and Medium 3.26% Small and Cottage 1.51% –Exports 13.6% –Employment 4.9%

3 Current policy direction: –ADLI: Agriculture Development Led Industrialization –IDS: Industrial Development Strategy

4 THE PERFORMANCE OF THE ETHIOPIAN MANUFACTURING SECTOR: –Trends of basic manufacturing figures

5 COMPETITIVENESS OF ETHIOPIAN MANUFACTURING: Concept and measures of competitiveness: Competitiveness capacity to sell ones product profitably; To be competitive a firm : must undercut/offer products of better quality than competitors; must be earning a level of return to the resources used in production

6 Productivity and competitiveness linked; –A firm unlikely to be competitive if it does not make a productive use of its factors and other inputs; –Hence, analyzing unit cost indicators of paramount importance for building internationally competitive industries;

7 Unit cost approach to competitiveness based on comparing cost structure of local firms with those of competitors; Costs fundamental determinants of competitiveness;

8 Types of competitiveness indicators: –Domestic competitiveness; –International competitiveness; –Indicator of comparative advantage

9 Measure of competitiveness: –Unit cost approach, a value <1 means a firm produces at a lower cost than competitors, thus more competitive; –Unit cost <1 means the firm making pure profit;

10 Estimation Results: –CSA data (1998/ /07) on medium and large industries used; –Considering domestic competitiveness: A great number reveal values <1; An indication that they can sufficiently withstand competition from abroad. –Regarding international competitiveness: More than 2/3 unable to cover cost of production including capital, hence uncompetitive

11 MAJOR CONSTRAINTS AND PROBLEMS OF COMPETITIVENESS External/Policy-related: –Import liberalization; –High production cost of domestic products; –Dumping; –Under-invoicing; –Contraband/Illicit trade; –Poor private-public dialogue; –Industrialization policy.

12 Internal Constraints/Problems: –Low product quality; –Business advocacy; –Technology-related problems; –Human resources-related problems; –Poor entrepreneurial quality and BDS skills;

13 Conclusion: –Ethiopian manufacturing by and large: Can sufficiently withstand competition from abroad based on IDC values computed,; Unable to cover all costs of production including cost of capital, hence internationally uncompetitive, based on IIC computed.

14 Recommended measures: –By government –By the private sector

15 END OF PRESENTATION


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