Spillovers from industrial jobs in Ethiopia

Policy brief Mar 2026 Sustainable Growth, Employment and SMEs

Ethiopia’s manufacturing sector remains deeply dual: a small group of highly productive firms coexists with a large informal workforce. Industrial policy has supported the expansion of modern manufacturing, yet most workers remain in small, low-productivity enterprises.

The evidence shows that industrial job growth and informal employment are positively linked at the local level. The strength of this relationship varies across industries, reflecting differences in production linkages, local demand effects, and potential complementarities between large and small firms.