Public Investment In Irrigation And Training, Growth And Poverty Reduction In Ethiopia

This paper analyzes the impacts of public investment in small-scale irrigation and farmer training on growth and agriculture-led development, on food security, and on poverty in Ethiopia. We use a dynamic Computable General Equilibrium (CGE) model linked to a microsimulation model based on the latest household income and expenditure survey, in a topdown approach. All public investments are assumed to increase total factor productivity through increased supply of skilled labor and/or irrigated land. We find that investing in farmer training alone has great potential to increase growth, food security and poverty reduction, given that the economy is labor-intensive. Investing in training combined with irrigation has even greater impacts. An irrigation only approach will not yield the expected results if agricultural labor does not have the required skills. The irrigated agriculture sector has great potential despite its small size. However, for the impact to be notable, important investments are required in the first place to increase the share of irrigated agriculture versus the rain-fed. An agriculture-led development is less likely to occur because: i) of weak forward and backward production linkages between agriculture and manufacturing sectors; ii) a significant share of manufacturing inputs is imported; iii) the resulting contraction in private investment which restrains expansion of the manufacturing and services sectors