Sunday, April 4, 2010

A great example of economic progress in Ethiopia:
In the early 2000s, China-made leather shoes flooded into the Ethiopian market plunging the local industry into a slump. Remarkably, however, the industry soon resumed vigorous growth, not only taking the market back but even finding its way into the international market.

The full article is gated, but from the abstract:
The leather-shoe industry in Ethiopia is thriving, and in the early 2000s it managed to recover the domestic market which had once been swept by imported Chinese shoes. Using primary enterprise-level data, this paper finds that the industry has been growing not only because of a number of new entrants but also because of the growth of enterprises that have been improving product quality and developing new marketing systems.

This is a classic example of a free market win-win. Ethiopia opening itself up to competition results in better product quality in its domestic industries. This quality growth allows domestic industries to compete internationally, yielding a new-found export capacity. h/t: Chris Blattman
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