Effec ts of agriculture on economic growth

When we compare Ethiopia's economic performance with some selected resource based African countries, Ethiopia's growth experience stands out from a group of similar, high-performing regional peers, analyzed by the IMF (IMF (2013a). When also compared with other five non-resource dependent African economies they experienced high growth rates, though not as high as Ethiopia: Burkina Faso, Mozambique, Rwanda, Tanzania, and Uganda (SSA). These countries (including Ethiopia) share several key characteristics which help explain their growth performance, such as improved macroeconomic management, stronger institutions, increased aid, and higher investment in human and physical capital (IMF (2013a).

Based on the above evidences when we evaluate the status of agriculture in economic performance of Ethiopia it is possible to conclude agriculture playing critical role and still major contributors of Ethiopia's Economy. Nevertheless, there are two contradicting prevailing research finding on the overall status of agriculture in the economy. On the one hand, Nin-Pratt (2015), reports that agricultural output per worker grew by 2 percent during 2001-2012. This compares to 0.

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6 percent growth during 1990s and no growth in the 1970s and 1980s. He also estimates annual average TFP growth rate of 2.2 percent for the best performers (ranging between -1.0 and 4.2 percent) during 1995-2012. The corresponding figure reported for Ethiopia is 2.6 percent, which is among the best performance in agriculture.

On the other hand, World Bank (2007) economic assessment report indicated that East Asian successes in agricultural transformation were characterized by faster growth in land than labor productivity, which supported growth in both agricultural incomes and employment. Since total factor productivity growth surpassed the drop in food prices, both farmer and consumers benefited.

According to World Bank the interaction among increasing agricultural incomes and enhanced transport raised the thickening of markets, additional employment growth in rural non-agricultural employment and profound rural-urban connections. On the contrary, much of Ethiopian agriculture specifically in crops and livestock output-is captured in a "low productivity trap and has not seen steady increases in either land or labor productivity". According to World Bank report the major cause for low social returns are a result of failures to change prospective technological developments to higher agricultural returns, high climate-linked risks and land degradation, poor market-consolidation which is in turn affected by the lack of transport and inadequate trading linkages (World Bank, 2007).