Monday, June 19, 2006

Where coffee first addicted man

Due to insistent public demand (?), I am taking time to post about my host country here.

Ethiopia is known for many things. It is the birthplace of coffee, as well as possibly the birthplace of humanity. Lucy is here in Addis Ababa. Ethiopia has been free of colonial rule, except for a brief occupation by Italy under Mussolini.

Unfortunately Ethiopia is also known for its poverty. It is the second biggest in Africa in terms of population (75 million), but is one of the poorest countries in the world. Life expectancy here is below 50 years.

Ethiopia also experimented with socialism when their last King Haile Selassie was deposed in 1974. However a successful uprising replaced it with a government more sympathetic to markets and free enterprise. However you can still see the iron hand of government intervention everywhere - exchange rates are tightly controlled, though I am told there is a flourishing black market. There remain many obstacles to open trade and business investment. The value-added tax rate is 15%.

As I walk the streets I have an impression, despite the large number of beggars and street children (not that Manila has already inured me to the sight), that economic activity is starting to pick up. If they can move more rapidly in terms of market reforms, it can be a great experiment to check whether a move away from a planned towards a market economy can make a big difference in terms of human development. Fingers crossed.

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