THE CONTRIBUTION OF AGRICULTURE TO ECONOMY WIDE GROWTH & POVERTY REDUCTION IN ETHIOPIA: A SAM BASED MULTIPLIER ANALYSIS

Abstract

Agricultural Development Led Industrialization (ADLI) is the main strategy of Ethiopian Government towards achieving accelerated growth and poverty reduction. This study examines the role of agriculture in the overall economic growth, demand creation and poverty reduction using a 2005/06 Ethiopian Social Accounting Matrix (SAM). A SAM based Multiplier Analysis technique is used in deriving sectoral multipliers. The main findings of this analysis reveal that exogenous injection such as increase in government spending, increase in export demand and increase in transfer from the Rest of the world will produce greater demand, overall economic growth and poverty reduction when the injection is taken place on agriculture.