4.1. The Advent of Industrialization on the Railway Line in Ethiopia
The origin of modern industrial-oriented urban centers can be traced back to the beginning of the 20th century, with the advent of the railway transport system [
32]. Emperor Menelike II is credited for championing the construction of a railway line for the transportation of passengers and freight from the center to the ports of Ethiopia [
33]. The construction and installation of railway transport, with its intrinsic element of the telegram, was started after Emperor Menelik II gave a written concession to Alfred Ilg (a Swiss national who arrived in Ethiopia in 1877) [
32,
34], which officially empowered him to study the project and to set up a company for the construction of a railway line on the 11th of February 1893 [
33,
34]. The construction of the railway line started at the port of Djibouti and reached the Ethiopian border, specifically called Dewele or Douale, in 1901 [
33]. This railway was a single-gauge (950 mm) line, which had a 781-km length with more than 30 stations [
33].
Initially, the stations were two to three buildings that served limited railway service-related functions, such as ticket selling, administration, residences for staff, and warehousing, also serving as a space for passengers to wait. The buildings, which were constructed in the courtyards of the railway stations, attracted different kinds of urban service providers and traders to lead sedentary lives in and around the stations. These stations also attracted investors to engage in the manufacturing sector. Then, station areas gradually evolved into urban villages and urban centers. Some of these station-based urban centers, such as Kaliti, Akaki Beseka, Mojo, Awash Sebat Kilo, and Dire Dawa, specialized in light manufacturing [
35].
Therefore, there is a direct nexus between the railway transport → industrialization → urbanization in Ethiopia. It was in the 1920s, with the advent of the railway transport system, that the manufacturing sector evolved in the eastern corridor, along which the Ethio–Djibouti railway line stretched. Since then, the country followed different approaches for the industry sector.
4.2. Historical Insights of Industrialization and Urbanization in Ethiopia
Ethiopia followed different development approaches, depending on the government’s ideology. Since the end of the WWII, Ethiopia has witnessed three regimes: the Imperial (1950s–1974), the Dergue (1974–1991), and EPRDF (since 1991) [
7,
35,
36].
The construction of a modern railway line that runs from the port of Djibouti to the central parts of Ethiopia ended in 1917 [
32,
33]. The advent of this railway line had a spillover effect on the development of modern manufacturing enterprises, demographic changes, and urbanization [
32,
35]. The imperial regime witnessed mostly private-led import substitute industrialization (ISI) development strategies. The ISI strategy attracted foreign investors to engage in the production of consumable goods. This act had a positive impact on the growth and development of urban centers and laid the base for the eastern economic corridor, such as Addis Ababa, Kaliti, Akaki, Mojo, Metehara, Awash, and Dire Dawa [
33].
With the three consecutive five-year plans (1957–1973) of the Imperial era, the government aimed to accelerate agricultural development through the promotion of commercial agricultural ventures, investing in the development of various social infrastructures such as transportation, construction, and communications, and introducing and developing commercial agriculture [
7].
With regard to industrial development, light industries, mainly food and beverages and textile manufacturing, were dominant in the sector [
35]. These labor-intensive types of manufacturing caused an agglomeration of people and growth and the development of urban centers. As a result, the total output reached ETB 81.8 million. In the second five-year plan (1963–1967), the emperor declared investment law, which stated profit tax exemption for five years, remittance, duty-free machine imports, and equity participation in local firms for foreign national investors.
Between 1962 and 1969, cotton’s share in employment and output reached 40 percent and 33 percent, respectively, with the number of people employed doubling from 10,100 to 21,610 [
35]. Though urbanization at that time was below 5%, the manufacturing sector played a significant role in the agglomeration of people in the flourishing industries at the newly emerging station-based urban centers.
- (b)
The Dergue Regime (1974–1991)
After the revolution, the military controlled the political power and adopted socialism as the leading political economic ideology. In this period, the Dergue designed and implemented two development plans: the five- and ten-year development plans. The first five-year plan was largely about advocating for the role of the state in the economy. Accordingly, the military government nationalized all private enterprises. On the other hand, the ten-year perspective plan, like the prior economic policies of the country, underlined the importance of agriculture for the country’s economy, while the industrial sector was the other priority of the government. This plan was anticipated to bring an annual growth rate of 6.5% in real GDP, 4.3% growth in agricultural GDP, 10.8% in industrial GDP growth, and 6.9% in services. However, due to various challenges such as civil war, the government failed to realize its goals.
- (c)
Ethiopian People Revolutionary Democratic Front (EPRDF)—(Since 1991)
Following the downfall of the military government, the EPRDF controlled the political power. At the initial stage, the Transitional Government of Ethiopia (TGE) adopted an agricultural-led economic policy, i.e., the “Agricultural Development-Led Industrialization” (ADLI). This was followed by two subsequent strategies that focused on agricultural development: the Sustainable Development and Poverty Reduction Program (SDPRP) and the Plan for Accelerated and Sustained Development to End Poverty (PASDEP) (2005/06–2009/10). However, these neoliberal-oriented policies and strategies did not bring the intended economic growth for the country. The failure of these plans forced the government to adopt another model. The EPRDF Government produced the “Democratic Developmental State” political economy ideology by merging the developmental state from East Asian countries with democracy from the West. Following this, the government issued two consecutive five-year development plans: the Growth and Transformation Plan (GTP), i.e., GTP I (2009/10–2014/15) and GTP II (2014/15–2019/20).
The new industrial policy that was enshrined in the two strategic plans (GTP I and GTP II) boldly declared the need for transforming the economy from agriculture to the manufacturing industry [
8,
9]. During this period, industrialization and industry-oriented urbanization were revived. These two strategic plans propagated a cluster-based “special economic zone” or “industrial parks development” approach. For the realization of industrial parks development, different legislations were promulgated, and the Industrial Parks Development Corporation (IPDC) was established by the virtue of the Council of Ministers Regulation No. 326/2014. This structural transformation policy direction and the associated strategic plans paved the way for the revival of industrial-oriented urbanization with a new model technically known as industrial parks. For the first time, the concept of IPs was introduced in the Investment Proclamation 769/2012, in the form of an industrial development zone.
However, the phrase “industrial park” encompasses a wide variety of related concepts, such as free-trade zones, export processing zones, special economic zones, high-tech zones, free ports, enterprise zones, etc. [
37,
38,
39,
40,
41].
UNIDO (2020) gives a common definition for industrial park (IP), defining it as:
“a tract of land developed and subdivided into plots according to a comprehensive plan with the provision of roads, transportation and public utilities, sometimes also with common facilities, for use by a group of manufacturers”
This definition used a broader and comprehensive approach.
The Ethiopian legal system also defines IP using a broad and comprehensive definition, namely, as:
“area with distinct boundary … to develop comprehensive, integrated, multiple or selected functions of industries, based on a planned fulfilment of infrastructure and various services such as road, electric power and water, one-stop-shop and have special incentive schemes, with a broad view to achieving planned and systematic, development of industries, mitigation of impacts of pollution on environment and human being and development of urban centers, and includes special economic zones, technology parks, export processing zones, agro-processing zone, free trade zones and the like …”
Presently, the Government of Ethiopia has given special emphasis to sectoral transformation. The “Ten-Year Development Plan of Ethiopia (2021–2030)” discussed the issue of industrial-oriented urbanization under the economic sectors development plan [
42]. This “homegrown” economic reform document stated “sustainable urban development” as one of the key priority areas at the macroeconomic and sectoral levels [
43]. The current national policy enshrined the development of the manufacturing industry as one of the primary pillars for the ten-year homegrown economy [
43]. This transformation, among others, will be promoted by pursuing aggressive measures towards rapid industrialization and structural transformation [
43].
As a summary, the different industrial development approaches of Ethiopia, which were intended to bring sectoral transformation and urbanization, since the end of WWII are presented on
Table 2.
For the realization of sectoral transformation, the government of Ethiopia has been investing massively in enabling infrastructures and setting up a series of special economic zones or industrial parks. Before the pandemic, the Federal Government developed 12 industrial parks throughout the country.
4.4. The Prospects of Industrial Parks for Cluster Cities’ Formation in Ethiopia
Industrial parks have played an indispensable role in the flourishing of clustered cities. Marshall (1890) has mentioned three benefits of clusters for firms: knowledge and technology spillovers, labor pooling, and market access [
45]. For the government, clusters will help to reduce infrastructure cost and enable experimentation with policy changes before they are rolled out to the broader economy. The prevailing mode of industrial parks development is considered as a policy-driven industrial clustering around a supply source or a pool of workers [
45]. Well-designed, planned, and implemented industrial parks often lead to urban development in the vicinity of the park. For instance, Shenzhen Industrial Park, which exists in China, has grown from a small village to a mega city of 10 million people [
46].
In this section, we examined the IPDC or Federal Government-owned functional industrial parks, considering them as potential clustered cities, from location and population vantage points.
So far, there are 114 tenant companies which have working premises in the 12 government-owned IPs. (See
Figure 4). These IPs create job opportunities for more than 83,000 people, mainly for women, and generate USD 735 million in revenue for the country [
47]. The existing 12 IPs are functional throughout the country based on their proximity to market outlets, infrastructure, economic potential, and regional balance in development [
7]. As
Figure 4 indicates, the majority (8 or 66.67%) of industrial parks are established along the railway line of the eastern economic corridors [
7].
4.4.1. Location
Almost all of the existing functional industrial parks are located on the outskirts of pre-established cities. As
Table 3 indicates, with the exception of Hawassa, all IPs are located in suburban areas, within a range of 3 km to 20 km away from the central business district (CBD).
4.4.2. Population Agglomeration
The feasibility study of each functional park indicates that there is a significant agglomeration of people in IPs in the form of workers. The potential agglomeration of workers varies from park to park. By taking a projection of potential workers, each industrial park has the potential for the formation of a clustered city.
MOUDH [
48] categorized the different urban centers into seven categories based on population size (See
Figure 5).
Based on this MOUDC [
49] population size classification, the existing functional IPDC-owned IPs can be labeled as follows: the Bole Lemi, Kilinto, and Hawassa IPs are intermediate cities; the ICT park is a tertiary city; the Mekele, Adama, and Dire Dawa IPs are large towns; and the remaining IPs are small towns. (See
Table 4).