Author

  • Adisu Abebaw Degu

    • Salale University, Department of Economics, Fiche, Ethiopia
    • Ethiopia

  • Admassu Tesso Huluka

    • Association for Strengthening Agricultural Research in Eastern and Central Africa - ASARECA

Abstract

It is not uncommon that different government officials and practitioners infer the falling agricultural share in GDP to the underpinning of structural transformation in an economy. By using various studies result and a time series of data spanning from 1981 up to 2017, this paper investigated, whether the declining share of agricultural output in GDP is indicating structural transformation or not in Ethiopian economy. The study showed that the service is the fastest-growing sector in Ethiopia, and it covers more than 40% of GDP. The share of agriculture sector was 45% of GDP until 2011, while the industry sector has been stagnating. Thus, it shows how the falling share of the agriculture sector in GDP is being superseded by the service sector. Empirical works also reveal that even though the share of the agricultural sector in GDP is falling, it is the primary source for the overall economic growth of Ethiopia. The share of the rural population has decreased from 89 percent in 1981 to 80% in the year 2017. So the vast population of the country is living in rural areas where agricultural-based activities are common. Lack of labor shift from the agricultural sector to the industrial sector can also be attributed to the insufficient expansion of the modern industrial sector to absorb the growing force labor. Furth more, the demographic transition also showed a relative decline. Since structural transformation involves several interrelated processes, the declining share of agriculture output to GDP alone cannot explain the prevalence of structural change; the other processes like; industrialization, urbanization, and demographic transition need to be scrutinized.

Keywords

References

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How to Cite

Degu, A. A., & Huluka, A. T. (2019). Does the Declining Share of Agricultural Output in GDP Indicate Structural Transformation? The Case of Ethiopia. Journal of Economics and Behavioral Studies, 11(5(J), 54-68. https://doi.org/10.22610/jebs.v11i5(J).2966

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Section

Research Paper

Published in

Vol. 11 No. 5(J) (2019) Behavioural Economics, Growth & Structural Change View issue contents

Published

2019-12-09

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