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Ethiopia has recently started crude oil production in the Ethiopian-Somali state, with the prospect of commercial quantities. Inevitably, when a country begins to produce oil in commercial quantities, an economic phenomenon like the resource curse ("the paradox of plenty"), or more precisely the oil curse or the "Dutch disease" Becomes a topic of discussion. 19659003] So, is oil a blessing or a curse, and how can Ethiopia escape the trap of the "oil curse" in which some countries have fallen?
Berhanu Denu, an economist and badistant professor at the University of Addis Ababa, explains that what makes a resource a blessing or a curse is the way that the country manages to use it
. According to him, the paradox of abundance is not the effect of natural resources, as for every Nigeria, Venezuela or Democratic Republic of Congo. (DRC) there is a Norway or a Botswana that are able to create a stable and stable economy.
There are things that Ethiopia can do to avoid the pitfall of the "oil curse" according to him. The first is to create a peaceful environment by building a consensus with the local community on oil discovery and with the general public on how to use the resource.
In addition, Dr. Berhanu points out that it is not possible to cultivate the economy by focusing on a single economic sub-sector, which has led some countries to a trap after the discovery of oil. Focus on one sector of the economy while forgetting to invest, to introduce new technologies and to introduce modern processes in other sectors such as l & # 39; agriculture, industry, services, education and health poses problems to the country's economy. the economy can grow from the income generated by oil if it is used in other sectors of the economy Some countries thought that economic development would come from oil revenue forgetting the other sectors, which led to unbalanced development. Thus, for the huge revenues generated by oil not to undermine other sectors, Mr. Berhanu recommends to fully incorporate the oil sector into the current national plan of the country, the GTP II, and in future plans such as good. "And the legislature should oversee if it is implemented accordingly."
This attack on other sectors describes a more specific economic concept called "Dutch Disease", which denotes a situation where the growth of the national income from the extraction damages other sectors of the In this regard, Dr. Wondaferahu Mulugeta, Associate Professor of Economics at Jimma University, believes that there is a possibility that the dreaded "Dutch disease" may be jeopardized by increased export earnings. natural resources. This phenomenon can occur as the country's money supply increases through oil revenues, which can drive up inflation and lead to an appreciation of the real exchange rate. However, he believes that it is unlikely that this will happen in the case of Ethiopia, and also measures that the country can take to avoid it.
One step that the country should take is to spend oil-generated revenues on the production of important infrastructure and human capital development that help the economy in the long run rather than recurrent expenditures like the wages. Given the importance of the manufacturing sector in the country's national plan, GTP II, the badociate professor insists on the need to spend revenue on a large input sector that feeds the manufacturing sector, such as leather. In addition, Dr. Wondaferahu recommends that policymakers look for ways to control the inflation badociated with huge revenue generation from oil in order to avoid the phenomenon of "Dutch disease". It suggests a vocational training policy, a flexible labor policy and merit-based incentives that improve productivity and production side by side to combat inflation.
In addition, concerning the need to make available the right human resource. able to manage, supervise, authorize and tax the new oil sector, the Associate Professor expressed his belief that the government has already put something in place since the country may have some gap in this regard. And if we are not ready in this case, I believe it's not too late to do anything, he adds.
For Dr. Constantinos Bruhtesfa, expert in public policy, everything depends on democratic accountability. Countries like Norway have managed their oil resources so well for the benefit of their people and their development, unlike countries like Nigeria, Angola and Venezuela where the resource has become a curse, notes he. and once the income generated by oil enters the coffers of the government, the money should be kept in the books of the National Banak of Ethiopia and commercial banks, and there must be serious plans for the government. ;money.
stresses that people living in the specific area where oil is extracted should benefit in terms of human development, schools, health centers and general livelihoods. "We should have engaged Ethiopians able to manage the resource properly and use it for the benefit of Ethiopians, especially the region, which has a lot of agricultural potential but is still under food pressure."
This has two advantages, according to Dr. Costantinos. This will intensify the direct support of the population, which means they will have better livelihoods and build on the development work undertaken in the region.
Secondly, he says, it will also help to marginalize the groups supported. by some foreign governments and terrorist organizations who want to destroy the process of oil production. "Ethiopia has such an experience where Chinese and Ethiopian citizens have been killed by groups who feel that Ogaden oil should not be pumped unless their political agenda is agreed upon."
The other key element, says Dr. Costantinos. He proposes to create very clear rules and regulations to prevent oil companies from corrupting officials, the government abusing money and abusing the resource to the point of harming the environment.
According to him, these measures would help Ethiopia to repeat mistakes. countries created when managing their resource.
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