Paper short abstract:

Using the Deals and Development framework to examine the political drivers of rapid economic growth and maintenance in Ethiopia, the paper contends that the 2018 disruptive change in the political settlement affected export-oriented and domestic market-oriented economic actors differently.

Paper long abstract:

The demise of the EPRDF-led dominant party political settlement caused multiple layers of rupture and disruption in the Ethiopian political economy. We adopt the Deals and Development framework to identify and analyse the political determinants of rapid economic growth (2004-2017) and how current changes in the political settlement affect the interplay among various political and economic actors. We contend that there are substantive variations in how political and economic actors are affected by, and responding to the disruptive changes in the political settlement and the deals space of the Ethiopian political economy since 2018.

Our study shows that economic actors in the export-oriented sectors (Rentiers & Magicians) are primarily feeling the burn because of increased insecurity and emergence de-facto local actors exploiting power vacuum at the lowest level of governance. Key informant interviews from oil seeds exporters and the tourism sector reported no major (in)formal policy and regulation changes; hence the order has remained intact in the rent spaces. On the contrary, economic actors that target the domestic economy (Powerbrokers & Workhorses) are heavily affected by the ongoing change in the political settlement because politicians and bureaucrats significantly shape the rents they generate. Key informants on METEC and within the construction sector illustrated that the ongoing change has induced new policies, regulations and entrants which created disorder, opening up and unpredictability.

The Deals and Development framework offers insightful perspectives by shifting the focus from a narrow study of formal institutions to examining political drivers of growth in different growth episodes.