Can Africa Diversify its Exports? Lessons from Ethiopia

This article argues that successful export diversification – in terms of products, markets and upgrading – is contingent on an ‘ innovative and dynamic state - led industrial policy’ . It argues that addressing political economy distortions as well as the existence of institutional frameworks that address both market and government failures, engage firms in learning by doing, provide targeted incentives and promote investments in new economic activities are all necessary pre-conditions to enhance structural change through industrial policy. This approach has successfully fostered export diversification in Ethiopia’s flourishing leather industry, offering possible experiences to other African countries .