From Dergue Socialism to an ‘Ethiopian Neoliberalism’: Transition and Reform Under the EPRDF Since 1991

Abstract

This chapter analyses the defining transition that took place in Ethiopia from a command, centralised socialist economy to a market-oriented and neoliberal regime. In particular, it provides an understanding of institutional mechanisms and processes through which Chinese investment was then able to penetrate Ethiopia and establish various networks of state and society linkages. The chapter links the economic and political transition that happened when the EPRDF regime took power in 1991 to the emergence of new social forces with links to state institutions. The main argument of this chapter is that the reform period ushered in by the change of government in 1991 gave rise to a particular variant of Ethiopian neoliberalism whose form and character were shaped by pre-existing social relations and political structures. As the capitalist transition was emerging out of the political and social context in Ethiopia, the internationalisation of Chinese capital was simultaneously beginning to be a key feature of the global political economy. It is the intersection of these two forces that have shaped neoliberalism in Ethiopia. Rather than calling it a ‘facade’, the book regards the political and economic liberalism that was instituted by the EPRDF to be essentially a particular variant of neoliberalism. Chapters 3 and 4 are thus interlinked in deconstructing the political transformation and evolving state-society relations in Ethiopia, including the changing sphere of ethnocentric politics, from the socialist Dergue to neoliberal and developmental EPRDF regimes. One interesting discovery is that China went through a very similar transition during the same decades, though in a more profound manner and in a much larger scale. Thus, the penetration of Chinese capital in Ethiopia is not a historical coincidence.