Ethiopian Macroeconomic Modeling in Historical Perspective: Bringing Gebre-Hiwot and His Contemporaries to Ethiopian Macroeconomics Realm

Much of the macroeconomic analysis in Ethiopia is hardly linked to the country’s pioneer development thinkers. The latter, however, articulated the Ethiopian development problems and what should be the appropriate policy direction to address them nearly a century ago. This articulated development thinkers of the early 20 th century Ethiopia had captured the imagination of prominent Ethiopian historians and their students. Ethiopian economists seem to lag behind in appreciating the theoretical insight of these pioneer development thinkers. This article is aimed at bridging this gap. The paper will, first, reviews the economic ideas of theses reformer-intellectuals and then build a linear model based on the synthesis of their development thinking. The model is then solved to render analytically solutions that will give theoretical insights on historic and contemporary macroeconomic issues in Ethiopia. I argue that some important development concepts such as the deterioration of the terms of trade of developing countries, the vicious circle of poverty and structuralist analysis of North-South macro economic interaction has, contrary to the statement in existing development literature, has its origin in early 20 th century Ethiopian Development thinking.