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Abstract
Agriculture accounts for over half of Ethiopian GDP, yet the case for agriculture as a focus of economic growth strategies must
rely on identifying a set of intersectoral linkages through which agricultural growth contributes to the growth of nonagriculture
in the Ethiopian economy. This article develops a four-sector numerical simulation model of economic growth in
Ethiopia which permits the calculation of macroeconomic growth multipliers resulting from income shocks to agriculture,
services, modern industry, and traditional industry. The resulting growth multipliers are 1.54 for agriculture, 1.80 for services,
1.34 for modern industry, and 1.22 for traditional industry. These results depict an economy in which intersectoral linkages
operate on a highly uneven basis. These limits are reflected in the wide disparity between sectoral growth multipliers and by
substantial differences in the patterns of their decomposition. The policy relevance of these findings relate, in part, to the
distributional implications of growth in particular sectors. Poverty in Ethiopia is disproportionately rural. An income shock to
agriculture is clearly the most progressive choice, indicating the need to highlight agricultural development in growth
strategies for Ethiopia. Yet, the simulation results further indicate that doing so imposes relatively little trade off against total
benefit. While a $1 service sector income shock generates $0.80 in indirect benefits, a $1 agricultural income shock still
generates $0.54 in indirect gains - a somewhat smaller benefit, bnt one likely to make the greatest possible impact on poverty
reduction. © 1999 Elsevier Science B.V. All rights reserved.