Paper short abstract:

We develop an analytical framework combining political settlements analysis and Jessop’s theory of the capitalist state to explain the rise and fall of state-led industrialization in Ethiopia. Including accumulation strategies and attempts at hegemony can better account for shifting policy regimes.

Paper long abstract:

State-led development is experiencing a renaissance in many low- and middle-income countries. However, unlike in the ‘developmental states’ of East Asia, we do not yet have a good understanding of why some states embark on long-term projects of structural transformation while others fail. In this paper we ask under what conditions targeted industrial policy regimes aiming at rapid industrial development are likely to be sustained. A rich literature has used political settlement theory to analyze how ruling coalitions can build rent control and management systems that allow for effective economic statecraft in support of structural transformation. We contend that, for all of its evident strengths, political settlements analysis, with its focus on coalition building or elite bargaining, struggles to explain the choice of particular accumulation strategies. Drawing on Jessop (1990, 2008, 2016) we develop an extended political settlements analysis that views the state itself as an institutional ensemble wherein various factions strategically pursue accumulation strategies, seek to push the state apparatus in particular directions and, crucially, attempt to develop and defend hegemonic narratives to justify and support their actions. We apply this framework to an in-depth case study of Ethiopia between 1991 and 2022, which was hailed as an ‘African developmental state’ before recently jettisoning much of its industrial policy regime and descending into civil war. Empirically, we draw on qualitative interviews with Ethiopian policy makers, government officials, company managers and trade unionists conducted over various rounds of fieldwork between 2015 and 2022.