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Study on Industrial Park Development: Issues, practices and lesson to Ethiopia

Technical Report · February 2017

DOI: 10.13140/RG.2.2.34678.50247

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4 authors, including:

Alebel B. Weldesilassie Mulu Gebreeyesus

Ethiopian Development Research Institute Ethiopian Development Research Institute
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Berihu Assefa Gebrehiwot

Ethiopian Development Research Institute
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 Study on Industrial Park Development: Issues, practices and lesson to
Ethiopia
Alebel B. Weldesilassie, Mulu Gebreeyesus, Girum Abebe and Berihu Assefa

Ethiopian Development Research Institute

Short summary

Despite remarkable economic growth over the last decade, Ethiopia has achieved little in terms of
economic structural transformation. The key constraints that hinder economic transformation are
lack of capital, foreign exchange, knowledge, infrastructure and institutional constraints in
delivering efficient services. An economic growth model that focuses on high productivity sectors,
especially the manufacturing and modern agriculture and services is imperative to maintain the
growth performance of the economy and speedup structural transformation.
Industrial Parks (IPs) have been and are key policy instruments in enhancing economic
transformation by attracting investment, promoting technological learning, upgrading and
innovation and generating stable and decent employment. However, the challenge is that industrial
park development (IPD) requires not only setting realistic goals but also designing feasible
pathways towards the effective achievement of its goal. Towards this end, we proposed feasible
policy and institutional options that consider specific features of Ethiopia, its comparative
advantage, international experiences in IPD and the prevailing international opportunities.
First and foremost, clear understanding of the concept of IP and what it envisions to achieve in the
medium- and longer term is essential among all key stakeholders. Not only does the study outline
how industrial parks must be understood and implemented but it also proposes appropriate
incentives to develop strong commitment among all political and government leaders for its
effective implementation.
Second, we propose innovative institutional arrangement that enables to clearly define ‘the nature
of Industrial Parks’ in Ethiopia. Accordingly, we suggest that priority be given to Agro processing,
Textile and Leather and Leather products as well as metal (steel) and engineering sectors to realize
maximum benefit from IPD in employment, foreign exchange, domestic linkage, and improving
export and productive capability. Besides, to enhance technological learning, innovation and
catch-up processes, it is strongly advisable to develop Science and Technology Parks. In line with
these, key issues in selecting IP are also identified.
In line with its CRGE strategy and to remain proactive in addressing environmental issues from
the outset, Ethiopia needs to brand its Industrial Parks as ‘Green’. Ethiopia has the advantage of
reaping the substantial benefits of Eco–Industrial Parks. The study also proposes to establish
Custom Special Supervision Zones and Logistics Parks to solve problems that arise from Customs,
Logistics and Transport services.
Ethiopia can use IPs as laboratories to experiment or pilot some key reforms before they are made
national policies. Examples include participation of foreigners in logistic services, innovation in
the financial sector to address shortage of foreign currency, labour laws and so on. Besides, we
 propose options to ensure that linkage is created between park enterprises and the domestic
economy, and Parks not to be ‘enclaves’. To realize these, we propose options on how to ‘target
policy incentive’ and ‘clear and unambiguous legal framework at federal, regional and park levels’.
Third, in line with these institutional options, we propose innovative organizational arrangements
at regulatory, implementing and park levels for the efficacy and effectiveness of IPD in Ethiopia.
We propose key roles and responsibilities of the different organs, with the required organograms.
Fourth, we also propose giving due consideration to Park promotion, development of appropriate
Indicators that help to track the success of IPD and build domestic capacity in IPD at the early
stage of IP development in Ethiopia. Finally, the study identified key outstanding issues that need
to be given due consideration in the Industrial Park development of the country.

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