The post 1991 ethio china partnership with particular reference to the relevance of chinese development model to ethiopia

ADDIS ABABA UNIVERSITY SCHOOL OF GRADUATE STUDIES THE POST -1991 ETHIO-CHINA CHINA PARTNERSHIP, PARTNERSHIP WITH PARTICULAR REFERENCE TO THE RELEVANCE OF CHINESE DEVELOPMENT MODEL TO ETHIOPIA By Gereziher Haftu Advisor Dr Hussein Jemma June 2017 THE POST-1991 ETHIO-CHINA PARTNERSHIP WITH PARTICULAR REFERENCE TO THE RELEVANCE OF CHINESE DEVELOPMENT MODEL TO ETHIOPIA By Gereziher Haftu A THESIS SUBMITED TO SCHOOL OF GRADUATE STUDIES OF ADDIS ABABA UNIVERSITY IN PARTIAL FILFILLEMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTERS OF ARTS IN INTERNATIONAL RELATIONS AND DIPLOMACY Advisor Dr Hussein Jemma ADDIS ABABA UNIVERSITY, COLLEGE OF SOCIAL SCIENCES, DEPARTMENT OF POLITICAL SCIENCES AND INTERNATIONAL RELATIONS ADDIS ABABA June 2017 ADDIS ABABA UNIVERSITY SCHOOL OF GRADUATE STUDIES THE POST-1991 ETHIO-CHINA PARTNERSHIP WITH PARTICULAR REFERENCE TO THE RELEVANCE OF CHINESE DEVELOPMENT MODEL TO ETHIOPIA By Gereziher Haftu COLLEGE OF SOCIAL SCIENCES, DEPARTMENT OF POLITICAL SCIENCE AND INTERNATIONAL RELATIONS APPROVED BY BOARD OF EXAMINERS ADVISOR SINNITURE DATE INTERNAL EXAMINER _ EXTERNAL EXAMINER SIGNITURE DATE _ SIGNITURE DATE Declaration I, the undersigned, declare that this thesis is my own original work and has not been presented for a degree in any other University and that all sources of material used for the thesis have been duly acknowledged _ Gereziher Haftu June 2017 This thesis is submitted for examination with my approval as an advisor of the candidate Hussein Jemma (PhD) June 2017 Table of Contents Contents page Table of Contents i List of Tables ………………………………………………………………………………… iv Appendicies iv Acknowledgements………………………………………………………………………… … v Accronyoms and Abrivations ……………………………………………………………………vi Abstract vii CHAPTER ONE INTRODUCTION 1.1 Background of the Study 1.2 Problem Statement 1.3 Central Argument 1.4 Objectives 1.4.1 Overall Objective 1.4.2 Specific Objectives 1.5 Research Questions 1.5.1 Core Research Question 1.5.2 Specific Research Questions 1.6 Methodology and Methods 1.6.1 Methodology 1.6.2 Methods: Sources of Data and Instruments of Data Collection and Analysis 1.7 Ethical Considerations 1.8 Significance of the Study 1.9 Scope of the study 1.10 Limitation of the Study 1.11 Organization of the Study………… ………………………………………………………9 CHAPTER TWO………………… ………………………………………………………… 10 CONCEPTUAL AND THEORETICAL FRMEWORKS 10 2.1 Conceptual Framework 10 i 2.1.1 Partnership 10 2.1.2 The Concept of Development, Development Paradigms, and Development Model 11 1.3 Neoliberal and Developmental state development paradigms…………… …….…14 2.1.4 Development Model and the Chinese Experience… …………………………… 15 2.1.5 The Essence of Chinese Development model ………….………………………… 16 2.1.6 Debates over the Chinese Development model and its transferability……….………19 2.2 Theoretical Framework…… ………………… ………………… ………………… …22 2.2.1 Policy Transfer 22 2.2.2 Learning 24 CHAPTER THREE…………………………………… ……………………………….…….27 THE POST-1991 ETHIO-CHINA PARTNERSHIP 27 3.1 Introduction…… …………………….………………………………………………….27 3.2 Economic Partnership 28 3.2.1 Investment 30 3.2.2 Agricultural Cooperation 36 3.2.3 Trade 37 3.2.4 Aid and Loans 38 3.3 Political Relations 40 3.4 Cultural Relations 43 3.5 Challenges of Ethio-China Partnership 45 CHAPTER FOUR………………………………………….………………………….…………47 THE RELEVANCE OF CHINESE DEVELOPMENT MODEL TO ETHIOPIA 47 4.1 Introduction……………………………………………………………………………….47 4.2 Ethiopian Government’s Adoption of Chinese Development Model and its lessons 48 4.2.1 Economic Aspects 48 4.2.2 Political Aspects 50 4.3 Enabling Factors for Ethiopia to adopt Lessons from Chinese Development Model 52 4.3.1 Agriculture- Based Economy 52 4.3.2 Availability of Abundant and Cheap labor 53 4.3.3 Developmental State Ideology 54 4.3.4 The Late Developer Status 56 4.3.5 Internal Stability 56 ii 4.4 Specific Aspects that Ethiopia could adopt from the Chinese Development Model 57 4.4.1 Educational Reform 57 4, 4, Agricultural Transformation 58 4.4.3 Poverty Reduction 59 4.4.4 Attracting FDI and Integrating Domestic Economy with the Global economy 60 4.4.5 Other Lessons 61 4.5 Hindering Factors 63 4.5.1 Absence of Strong Leadership Institutions 63 4.5.2 Lack of Technological Advancement 64 4.5.3 Difference in Political Systems 64 4.5.4 Culture, Working Habit, and Working Ethics 64 4.5.5 Other Hindering Factors 65 4.6 Challenges of Adopting Chinese Development model to the Ethiopian Situation 66 CHAPTER FIVE 68 CONCLUSION 68 REFERENCES 70 Appendicies i iii List of Tables Table 3.1 Summary of Licensed Chinese Investment projects by Sector and Investment Status since August 27, 1998 - March 09, 2017………………………………………………………………page 32 Table 3.2 Summary of Licensed Chinese Investment Projects by Year and Investment Status since August 27, 1998 – March 09, 2017…………………………………………………………………………….33 Appendices Appendex1: Semi–structured interview questions prepared for all respondents…………………… i Appendix 2: Overview of key informant respondents………………………………………………… ii Appendix 3: Summary of Licensed Chinese Investment Projects, by Year August 27, 1998 -March 09, 2017……………………………………………………………………………………………………….iii Appendix 4: Summary of Licensed Chinese Investment Projects by sector August 27, 1998 - March 09, 2017……………………………………………………………………………………………… … iv Appendix 5: Summary of Chinese Investment Projects by Region August 27, 1998 - March 09, 2017……………………………………………………………………………………………….………v iv Acknowledgements First and foremost, I would like to thank my Advisor, Dr Hussein Jemma, for his guidance, caring and treatment creating a favorable condition to discuss issues in detail and work in collaboration, as well as, his fatherly follow up to complete this study Next, the key informants who devoted their precious time to me during primary data collection deserve heartfelt gratitude I would like to express my gratitude and appreciation to my brother Welday Haftu, my family, and friends for their material and moral support that helped me to complete my study , Gereziher Haftu v Daniel Maman and Zeev Rosenhek ,(2011), The Institutional dynamics of a Developmental State: Changes and Continuty in State -Economy Relations in Israel The Open University of Israel Research Institutefor Policy , Poliical Economyand Society working paper no_5, 1-38 David Benson and Andrew Jordan,(2011),What Have We Learned from Policy Transfer Research? 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Journal of Contemporary China (2010), 19(65), 419-436) Official Documents Chinese Constitution of 1982 Amended in 2004 The 1995 Fedreal Democratic Republic of Ethiopia (FDRE) Constitution 2002 FDRE Industrial Development Strategy FDRE Industrial Development Roadmap (2013-2025) The Second Growth and Transformation Plan (GTP2): Manufacturing sector’s Strategy (20152020) 79 key informants No_ Name sex Organization Position Date Assefa Habtewold M All Ethiopian Unity Party Vice March 21, 2017, president 9:50- 11:10 AM Maastricht university Assistant April 21,2017 Netherlands professor of Elsije Fourie(through F mail) Globalization and Development Studies Fantu Cheru(through M mail) Leiden University , professor of Netherlands political April 20, 2017 economy and senior researcher of African Studies Center Melaku Mulualem M Ethiopian Foreign Relations Head of March15,2017 Strategic Study Institute Foreign 10:30-11:40 PM Policy Analysis Department Temesgen Teshale Tiruneh Gamta M M Ethiopian Ministry of Foreign China’s Desk March 14,2017 Affairs Officer 2:40-4:20 PM Ethiopian Federal Democratic Executive March 20,2017, Forum Party(Medrek) Committee 2:30-9:30 PM member Wasihun Tesfaye M Ethiopian Development Party 80 Executive April 03,2017 committee 9:45-10:15AM Appendixes Appendex1: Semi –structured interview questions prepared for all respondents What are the motives for Ethio-China Partnership? What is the current level of Ethio-China Partnership? In what aspects is the Ethio-China relationship underpinned and which sector weights What type of partner is China for Ethiopia? What qualities and problems it have in comparison to the Western powers? How you explain the Chinese developmental model? What are the characteristics of the China model? Do you think it is peculiar? Do you think it is relevant for Ethiopia? Which countries are used as sources development experiences by Ethiopia today? Why Ethiopia selects China model as a role model? What are the Challenges rooted in the China model 10 Is Ethiopia using the Chinese development model if so in what cases? 11 Do you think there is a ground for the application of Chinese development model in Ethiopia? If so in what aspects or what are the conditions? 12 What are the negative repercussions of the Chinese development model to Ethiopia? In democratization, human rights protection and transparency? 13 Is the adoption of China model contributing for the extension of the power of the ruling party with dominant status? If so how this could be solved? 14 Is China contributing for the development of Ethiopia? If so how? i Appendix 2: Overview of key informant respondents No_ Name Assefa Habtewold Sex M Organization All Ethiopian Unity Party Position Detail Vice president Elsije Fourie F Maastricht university Assistant Mail Netherlands professor of interview Globalization and Development Studies Fantu Cheru M Leiden University , Netherlands professor of Mail political interview economy and senior researcher of African Studies Center Melaku Mulualem M Ethiopian Foreign Relations Head of Strategic Study Institute Foreign Policy Analysis Department Temesgen Teshale Tiruneh Gamta M M Ethiopian Ministry of Foreign China’s Desk Affairs Officer Ethiopian Federal Democratic Executive Forum Party(Medrek) Committee member Wasihun Tesfaye M Ethiopian Development Party Executive committee ii Appendix 3: Summary of Licensed Chinese Investment Projects, by Year August 27, 1998 March 09, 2017 Year Total Pre- Implementation Operation No of Implementation Projects No of No of No of Capital in Perm Temp Projects Projects Projects '000' Birr Empl Empl 1998 1 10,277 54 1999 1 27,412 14 40 2000 1 5,325 68 2001 2 25,682 310 2002 1 7,921 30 2003 24 20 143,088 740 485 2004 25 18 442,478 1,183 2,213 2005 33 28 125,163 733 943 2006 57 50 1,350,056 6,135 7,703 2007 81 74 2,177,880 3,235 5,754 2008 94 85 2,068,125 8,132 14,378 2009 82 18 62 2,014,141 3,166 3,670 2010 56 16 40 1,118,564 2,430 2,118 2011 43 34 1,181,476 3,491 2,105 2012 90 31 54 701,805 2,030 666 2013 153 74 16 63 6,460,748 5,637 4,810 2014 91 25 22 44 1,925,717 2,612 747 2015 141 39 32 70 2,879,414 3,664 1,081 2016 126 81 17 28 169,279 2,320 621 2017 18 17 4,451 10 1,120 283 677 22,839,000 45,994 47,344 Grand 160 Total Source: Ethiopian Investment Commission 2017, soft copy iii Appendix 4: Summary of Licensed Chinese Investment Projects by sector August 27, 1998 - March 09, 2017 Sector Total No of Proje cts PreImplement ation No of Projects Implement Operation ation No of Projects No of Proje cts Agriculture 13 2 Manufacturing 763 208 109 446 Mining Education Health 13 Hotels (Including Resort Hotels,Motels and Lodges) and Restaurants Tour Operation, Transport and Communication Real estate, Machinery and Equipment Rental and Consultancy Service Construction Contracting Including Water Well Drilling Others* 45 12 131 24 138 27 Grand Total 1,120 283 Capita l in '000' Birr 3,509 Per m Emp l 40 Tem p Emp l 40 16,030, 381 36,500 29,4 64 58 12,6 26 42 530 10 15,417 60 42 29 89,968 667 216 16,321 193 58 11 96 885,82 6,27 7,04 31 80 5,704,5 53 9,16 27,0 22 56,000 70 245 160 677 22,839, 45,9 47,3 000 94 44 *Copper,Gold,Gemstone & Tantalum Concentrate Export, Import of Chemichals for Leather Industry/Through Bonded Warehose System/ etc… Source: Ethiopian Investment Commission 2017, soft copy iv Appendix 5: Summary of Chinese investment projects by region August 27, 1998 - March 09, 2017 Region Total No of Projec ts PreImplementat ion No of Projects Implementat ion Operation No of Projects No of Projec ts Addis Ababa 652 149 77 426 Afar Amhara 26 12 B.Gumze 2 Dire Dawa Gambella 2 Multiregional 38 Oromia 376 SNNPR Somali Tigray Grand Total 1,120 283 Perm Empl Temp Empl Capital in '000' Birr 8,391,40 1,800 21,52 34,88 35 580,478 1,633 574 487,341 942 173 35 405,591 1,731 2,198 113 70 193 18,39 450 9,020 12,724,4 58 133,527 4,300 1,200 110,097 110 63 677 22,839,0 00 45,99 47,34 160 Source: Ethiopian Investment Commission 2017, soft copy v 401 .. .THE POST- 1991 ETHIO- CHINA PARTNERSHIP WITH PARTICULAR REFERENCE TO THE RELEVANCE OF CHINESE DEVELOPMENT MODEL TO ETHIOPIA By Gereziher Haftu A THESIS SUBMITED TO SCHOOL OF GRADUATE STUDIES OF. .. understanding the relevance of Chinese development model to Ethiopia and the current level of Ethio China partnership It helps to examine whether the Chinese development model could work in Ethiopia. .. UNIVERSITY SCHOOL OF GRADUATE STUDIES THE POST- 1991 ETHIO- CHINA PARTNERSHIP WITH PARTICULAR REFERENCE TO THE RELEVANCE OF CHINESE DEVELOPMENT MODEL TO ETHIOPIA By Gereziher Haftu COLLEGE OF SOCIAL SCIENCES,