Abstract

Activist states have at least two important common features. First, they are characterized by robust networks that connect different government agencies with each other and with the private sector based on common interests and shared motives in alignment with long-term national development goals. Second, they possess high levels of operational capacity owing to qualified, stable and motivated bureaucracies capable of designing and implementing industrial policies. This study explores the industrial policy network and the capacity and motivation of bureaucrats in key public institutions in Ethiopia.

In the first part, the study investigates the inter-organizational coordination and the intra-organizational capacity in the implementation of industrial policy with the aim of creating a better understanding of the governance environment for structural transformation in Ethiopia. We find that while specialized sector institutions are important nods in the network of stakeholders, they seem to exert limited influence on private sector firms. Similarly, as far as organizational and coordination function is concerned, sector associations are considered as ineffective institutions that fail to mobilize collective action for the good of their members. This is particularly worrying for smaller firms who, unlike large firms, cannot easily muster direct channel of communication with government agencies.

To further understand implementation difficulties related with industrial governance, we also collected primary data from mid-level bureaucrats in nine government agencies that are involved in industrial policy formulation and implementation. We find that few of the sampled public sector employees consider public sector employment to be prestigious with attractive monetary rewards. In contrast, many appear to have taken public sector jobs out of necessity, are less likely to stay put and do not appear to be highly motivated. Low pay and limited prospect for livelihood and carrier path improvement are cited as main reasons for high turnover and lack of motivation. The bureaucrats, however, believed that there is much room for the productive interaction with the private sector, where the bureaucracy is reported to be more responsive and flexible in accommodating the concerns of private sector stakeholders. Lack of capacity and motivation on the part of mid-level bureaucrats, however, imply that such productive interactions are not always translated into efficient service delivery. To get the best out of industrial policies, it is thus not sufficient to design grand and ambitious national plans. Aligning sometimes conflicting institutional objectives and nurturing implementation capacity is equally important. To promote structural transformation, the industrial governance structure will have to accommodate the diverging needs and demands of various stakeholders including bureaucrats with self-interested motivates that may not be necessarily compatible with grand national objectives.