Macroeconomic and Finance Policy Research and Studies Sector
Macroeconomic and Finance Policy Studies Sector (MFPSC) is structured under PSI with four research centers namely: Macro-economy Policy Studies Center, Banking and Finance Policy studies Center, Trade Policy Studies Center and Environment & Climate Change Policy Studies Centre.
The aforementioned research centers under MFPSC are independently conducting researches jointly with local and international partners who include public and academics institutions, research centers, non-governmental organizations and the private etc. This division of PSI through its sector specific research centers is broadly engaged to accomplish the following commutative major activities:
- Conducting rigorous research and policy studies that provide knowledge-based inputs to policy- making and policy implementation
- Bridging policymaking through research and initiate policies and strategies
- Prepare policy and strategy documents to supplement macro level development interventions
- Support government macro level policy directions through research and information through policy-oriented research;
- Disseminating research outputs and findings to the policymakers, key research partners and other stakeholders for knowledge dissemination and exchange
- Setting research agenda that examine short, medium and long term policy issues.
- Conducting researches and studies rooted in rigorous analysis that is responsive to policy needs.
- Creating fora for discussing development issues among key stakeholders.
Study Centres
Macroeconomic Policy Research and Studies Centre
Under the Macroeconomic, Trade, Finance area, the primary objective is to investigate the complex economic system envisioning an overall economic development. Studies in this area assess if economic growth targets are achieved in a stable macroeconomic environment, the financial system is prudent, and the trade systems are efficient and can support the envisioned development outcomes.
Ethiopia has been recording fast economic growth rates over the last two decades. However, economic growth was accompanied by domestic and external imbalances resulting in high inflation (20.16% in 2020), persistent trade deficit (11 billion in 2020), debt distress, and overvaluation of the exchange rate. Moreover, Ethiopia has poor resource mobilization performance (9% of its GDP in tax revenue, compared to 16% for SSA) compared to peer countries. Government expenditure efficiency is also a challenge leading to inefficiently managed public investment projects.
Ethiopia has been recording fast economic growth rates over the last two decades. However, economic growth was accompanied by domestic and external imbalances resulting in high inflation (20.16% in 2020), persistent trade deficit (11 billion in 2020), debt distress, and overvaluation of the exchange rate. Moreover, Ethiopia has poor resource mobilization performance (9% of its GDP in tax revenue, compared to 16% for SSA) compared to peer countries. Government expenditure efficiency is also a challenge leading to inefficiently managed public investment projects.
Banking and Finance Policy Research and Studies Centre
Finance plays a vital role in economic development. The functioning of an economy depends on the financial system of a country. The financial system includes banks as a central entity along with other financial services providers. The government of Ethiopia has long recognized the crucial role of development finance and the need to create a modern financial system suited to the development of the country. Cognizant of this, the Policy Study Institute (PSI) has recently established a full-fledged center: the Banking and Finance Policy Research Centre. The center is established with the principal objective of undertaking high-quality scientific policy research and policy analysis in the field of banking and finance. It provides the government with knowledge-based inputs for policymaking and policy implementation. It reviews the existing financial policies, and proposes new policies to the government. It also aims to address the emerging trends in the financial sector of the country. The major thematic areas of the center include development finance, contractual savings (insurance, pension, and housing), capital market development, private Equity and venture capital finance, international remittances.
Trade Policy Research and Studies Centre
The Trade Policy Research Center (TPRC) is one of the centers under the Macroeconomic and Finance Sector at the Policy Studies Institute (PSI). The center is primarily focused on conducting rigorous policy relevant research works on questions pertinent to local as well as international trade and investment issues of relevance to Ethiopia. Specifically, it studies economic impacts of policies affecting trade and applies economic modeling tools to analyze potential impacts of ongoing regional and international trade agreements that the country is acceding to. Apart from this, researchers in the center collaborate with researchers inside and outside of the institute to conduct independent research on a range of policy relevant issues.
Information Communication Technology Policy Research and Studies Centre
The digital transformation revolution is currently happening in the world. Evidence from experiences of other countries shows that ICT, as a core of digital transformation, requires policy that guides its transformation and performance. Digital transformation strategies vary from country to country and success models can be affected by technical, social and economic issues of that particular country.
The GoE emphasizes the importance of the digital economy in realizing the country’s vision in its ten years perspective plan. As part of the home-grown economic reform, the Ethiopian government has also planned a five-year optimistic digital transformation goal (i.e., Digital Ethiopia 2025). As a result of this, the Ethiopian government is undertaking many policy and regulatory reforms. Some of these include E-transaction law, ICT Policy, the 10 years strategic plan of sectors, Privacy and security law, Liberalization of the telecom sector, Payment Instrument Issuance Directive, Media law and so on. However, achieving digital transformation within five years for countries like Ethiopia is not an easy task. It needs the participation of many stakeholders including the private sector, reform public regulatory agencies and institutions towards achieving this goal.