Ethiopia's industrial development objectives are based on the overall economic development strategy of the country, that is the Agricultural Development Led Industrialization (ADLI) which aims achieving an optimum utilization of the country's human and material resources. The major objectives of the ADLI are the following---

1. Promote economic efficiency and growth.

2. Bring about a structural shift in the economy in favor of industry.

3. Promote inter and intra-sectoral linkages.

4. Develop domestic technological capability for the production of intermediate inputs, outputs and capital goods.

5. Create a sound base for the transfer, adaptation and development of technology.

6. Develop and achieve international competitiveness in areas of clear comparative advantages in industrial exports.

7. Promote the use of labor intensive technology and of local resources.

8. Promote balanced regional development.

INDUSTRIAL DEVELOPMENT STRATEGY

In order to achieve the above objectives, it is important to formulate a suitable industrialization strategy, the major elements of which comprise the following.

1. Create and develop appropriate institutions to promote industrialization.

A. Promote and efficient utilization of existing support institutions and encourage their expansion and development in both the public and private sectors.

B. Upgrade the quality of vocational education, and training in existing institutions in the short run and promote an extensive development of vocational education and training in medium and long terms.

C. Establish extension services to promote SMIs and rural industries as well as informal and micro-enterprises in the various regions of the country and expand and upgrade them on a continuous basis.

D. Encourage private investors; promote cooperation and coordination between private and public activities and the mobilization of resources for industrial development.

E. Effectively utilize existing capacities in the short run and develop such capacities in the long run.

F. Encourage the development of cooperatives through various policy measures and incentive mechanisms.

2. Create a conducive environment for industrial development.

A. Ensure a speedy and smooth implementation the investment code and other policy measures that have been enacted and review and revise them as necessary.

B. Support the development of SMIs and local private capital.

C. Create the necessary legal and institutional framework for fully implementing the privatization of public enterprises.

D. Promote full capacity utilization of public enterprises.

E. Create additional production capacity in SMIs.

F. Promote a diversified industrial structure.

G. Utilize various policy instruments and incentive systems to promote environmental protection.

3. Promote inter and intra-sectoral linkages.

A. Utilize various policy instruments and incentive systems to promote inter- and intra-sectoral linkages; utilize labor intensive technologies and local resources.

B. Rehabilitate existing engineering industries with a view to achieving full capacity utilization.

C. Promote basic industries with multiple effects:

-- by establishing an appropriate institutional framework;

--by carrying out studies regarding measures to be taken to promote them;

--by encouraging private investment, both domestic and private; and

--by encouraging public investment where private sector investment proves inadequate to overcome bottlenecks.

D. Encourage the development of agro-industries through the utilization of various policy instruments and incentive systems.

E. Encourage the development of ancillary industries.

F. Promote the exploration and exploitation of industrial mineral resources.

G. Promote efficiency in industries supplying inputs to other industries by introducing appropriate policy instruments.

4. Create an appropriate financial environment.

A. Make an effective use of the Agricultural and Industrial Development Bank for encouraging investment in the sector.

B. Use various policy instruments and incentive systems to optimally utilize savings generated in the sector.

C. Enhance the sector's efficiency, profitability, and competitiveness by using various policy instruments and incentive systems.

D. Encourage the establishment of financial institutions that can address the needs of rural cottage industries, informal and micro enterprises in different regions.

E. Encourage the development of informal financial institutions for participation in investment activities.

5. Promote balanced regional industrial development.

A. Expand infra-structural services for the development of industry.

B. Create industrial extension services in all regions.

C. Utilize various incentive systems to attract investment to the various regions.

D. Create public awareness in the various regions regarding the need for industrial development.

E. Utilize various policy measures and incentive systems to promote resource based SMIs in all regions.

F. Encourage the participation of regional development-oriented associations in industrial development.

G. Develop the institutional capability for the formulation and promotion of viable investment opportunities in all regions.

6. Establish a close coordination between industry and other sectors of the economy, especially agriculture and mining.

A. Introduce various incentive mechanisms for the production of industrial raw materials.

B. Promote private sector investment in agriculture and mining, to be complemented by public sector investment where private sector is inadequate.

C. Develop the institutional capability for monitoring and coordinating the development of industry vis-à-vis linkages with other sectors of the economy, especially agriculture and mining.

7. Develop infrastructure.

A. Improve the efficiency of existing infra-structural facilities.

B. Undertake extensive public investment for the development of roads, energy, communications and water supply.

C. Where appropriate encourage private sector investment in infrastructure.

d. Promote the development of basic rural infrastructure through community participation in all regions so as to complement public investment.

8. Promote industrial exports

A. Effectively utilize existing industrial export potentials and diversify industrial exports.

B. Introduce various policy instruments and incentive systems to maximize foreign exchange earnings.

C. Ensure an internationally competitive industrial sector, especially in areas of comparative advantage in the long run.

d. Use various policy measures and incentive systems to promote private investment in export-oriented industries.

E. Create a conducive environment for the development of industrial exports.

9. Develop national technological capability

A. Strengthen national capability for the transfer and adaptation of technology and promote the diffusion and development of technology.

B. Promote and coordinate R&D activities between vocational and high level technical training institutions.

C. Create an institutional capability for the identification and selection of suitable technologies.

D. Promote technological adaptation and innovation by introducing appropriate legal and incentive mechanisms.