
Prloritizing targets of development
It is true, that the theory of demand and supply is the final arbiter of a market economy. This is more so in the case of the materially advanced and industrialized nations.
The story is, however, slightly different from that with respect to the developing countries whose economies were hitherto either feudalistic or socialistic.
The Ethiopian situation that opened up with market-oriented economy on the demise of the former command economy is a different case though, where fast growth has been witnessed in the very short of time of its introduction.
True also that Ethiopia has become of late a victim of the ever-rising oil prices and has been affected partially by the global food shortage or crisis, as well as by the rising inflationary cycle situation, particularly, on food items.
Yes, world climatic changes are also added contributors to the shortage of food items in this country. This is also true in other third world countries. However, there is a truth that we should all agree on. We have based our free economy system on backward agriculture and industrial economic bases. Besides, literacy question was yet on its nascent stage.
Higher institutions of learning were at their lowest level of development. Health factors were addressed only to a very few governmental posts, outposts and hospitals. Therefore the horses of the 'free economic system' found never ending meadows to ride free of the necessary bridles. Demand and supply curves were not given much attention with the hope that supply would mach demand comfortably.
Unfortunately, the truth of our poor economy has proven the opposite. Demand expanded much faster than supply. Showing huge gaps. The Government believed to some extent that this question was pertinent and scarcity of materials would be solved through market mechanism.
It seems that one thing was not sufficiently observed that our free economy had started with very low investments in all sectors of the economy and that there were not strong economic forces either internally or externally that would replenish the supply of goods and services as much as would have been desired.
This being the stark reality coupled with the natural phenomenon of global climatic change, inflation became the rule rather than the exception. I am not trying to say that this is the only truth, but, it is one of the essential variables that has hastened the steep climb in inflation.
In a country where there is little growth of heavy investment, perhaps, prioritizing the distribution of essential commodities based on strategic studies, might be a short-run solution. One might say that this is in sharp contradicts with the free-economic system and I have room in mind to accept that argument. However, in the nature of things, that could be a viable solution.
True, gainful employment might be affected in some parts of the economy, but, not in all parts. Supplies that could be generated with internal and external investment could flourish without any pressure by government, while other supplies that require heavy external investment inputs could be distributed with some control mechanism outside the market-economy. I suppose, this may prove a worthwhile solution to our short term difficulties if applied along with other pertinent inputs.
|