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Service Sector: The Source of Output and Employment Growth in Ethiopia

Author

Listed:
  • Zelalem Ejigu Kabeta
  • Inderjeet Singh Sidhu

Abstract

According to official data, the Ethiopian economy has grown at 10.9% on average in 2004/05-2014/15. During this period a structural change is observed as agriculture declined in its share and service sector dominates the economy. Hence, in this study we used a Shapely decomposition method to identify the service sector contributions to per capita GDP and employment growth during two periods of (1999-2005) and (2005-2013). Per capita GDP was decomposed into employment rate, productivity, and demographic changes. The result shows that during (1999-2005) growth periods, Ethiopian per capita GDP growth was mainly contributed by employment rate changes originated from the agriculture sector. Whereas the service sector has the highest contribution in productivity but a negative contribution in employment change. However, during the high growth period of (2005-2013) the growth in per capita GDP is due to productivity growth which emanates from the service sectors specifically from the distributive service sector.

Suggested Citation

  • Zelalem Ejigu Kabeta & Inderjeet Singh Sidhu, 2016. "Service Sector: The Source of Output and Employment Growth in Ethiopia," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 2(4), pages 139-156, December.
    • Handle: RePEc:khe:scajes:v:2:y:2016:i:4:p:139-156
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    References listed on IDEAS

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    5. Yared Seid & Alemayehu Seyoum Taffesse & Seid Nuru Ali, 2015. "Ethiopia - an agrarian economy in transition," WIDER Working Paper Series wp-2015-154, World Institute for Development Economic Research (UNU-WIDER).
    6. Syrquin, Moshe, 1988. "Patterns of structural change," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 1, chapter 7, pages 203-273, Elsevier.
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    Cited by:

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    2. Gideon Nkam Taka & Ta Thi Huong & Izhar Hussain Shah & Hung-Suck Park, 2020. "Determinants of Energy-Based CO 2 Emissions in Ethiopia: A Decomposition Analysis from 1990 to 2017," Sustainability, MDPI, vol. 12(10), pages 1-17, May.
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    6. Selamawit G. Kebede & Almas Heshmati, 2020. "Energy Use and Labor Productivity in Ethiopia: The Case of the Manufacturing Industry," Energies, MDPI, vol. 13(11), pages 1-21, May.

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    More about this item

    Keywords

    Ethiopia; service sector; decomposition; employment and Per capita GDP;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies

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