Price Controls Can't Reduce Hunger in Ethiopia
For Ethiopia's high prices, Ethiopian authorities reduced grocery bills for many low-income families. However, the shopkeepers were upset and some basic items were disappearing from store shelves. The government said price controls were necessary because some group or retailer had raised prices blaming global price increases. But this price controls were unnecessary and can't reduce hunger in Ethiopia. The reasons of higher prices in Ethiopia were from its inside. Such as the long-term political instability, irrational industrial structure, no have a good investment environment, inflation, devaluation, and so on. The price controls are the ways that just solve the superficial of high prices. However, the government was ignoring its own problems and blindly implements price controls, which will inevitably lead to a further decline consumer spending and investment environment of enterprise development worsen. The results may lead to social unrest.
Background of Ethiopia
First of all, let us to know about this country.
Ethiopia got a bad name; it was once named the world's least developed countries. The country's economic structure dominated by agriculture and its industrial base is very weak. Industry categories are unreasonable. The raw materials of industrial production and parts are mainly base on imported.
Since Mengistu Haile reigned, the economy was collapsing because of civil strife continued, policies failures and frequent natural disasters. After Ethiopian People's Revolutionary Democratic Front (EPRDF) control the whole country. They began the implementation of centering on economic construction, the agriculture and infrastructure as the leading development strategy. It prepared the transition to a market economy, and then its economic development was faster than before. However, the adversity came to this country again. The border conflict exploded in 1998, the government used lots of money for the war, combined with Western world's aid freeze, foreign...