Structural transformation via services or manufacturing? Evidence from Ethiopia

Working paper 11 Nov 2025 Firms, Trade and Sustainable Growth

The paper examines Ethiopia’s structural transformation from 2000 to 2022, finding that despite rapid economic growth, progress has been uneven and largely driven by productivity gains within sectors rather than by labour reallocation. It concludes that Ethiopia must pursue a more inclusive strategy that promotes labour-intensive manufacturing, upgrades informal services, and diversifies tradable sectors to achieve sustained transformation.