Growth with Equity

The renewed tensions currently shaping political discourse in the Horn of Africa serve as a reminder that questions of peace, sovereignty, and regional stability remain as consequential as ever. Yet even as attention focuses on immediate developments, it is important not to lose sight of a broader and enduring challenge. The ultimate purpose of leadership and governance is not conflict itself, nor the pursuit of power as an end in its own right, but the advancement of human well-being through peace, opportunity, security, and development. Regardless of how present disputes are resolved, Eritrea’s long-term future will depend not only on political outcomes but also on its ability to build capable institutions, transform its economy, expand opportunities, and create the foundations of shared prosperity. For this reason, reflection on development is not a diversion from current realities but an essential part of preparing for the future that lies beyond them. It is in this context that questions concerning Eritrea’s future must be understood.

Attention has understandably centered on sovereignty, constitutionalism, democracy, human rights, national reconciliation, regional relations, and political transition. These issues are fundamental and deserve serious attention. Yet they do not exhaust the challenges that Eritrea will face. Political change, whenever it comes, will not automatically generate economic opportunity, reduce poverty, create employment, or improve living standards. A national conversation about Eritrea’s future therefore requires more than a discussion of how the country should be governed. It must also address how the country should develop.

Eritrea’s future challenge is as much developmental as it is political. Decades of economic stagnation, limited industrialization, youth outmigration, unemployment, low productivity, and regional disparities have left the country confronting a complex set of structural obstacles. Rebuilding institutions and restoring constitutional government will be important steps, but they will not by themselves generate sustained and inclusive development. Eritrea will need a coherent strategy capable of transforming its economic structure, expanding productive opportunities, and ensuring that growth benefits all regions and communities. Indeed, the long-term success of any political transition will ultimately depend on its ability to deliver tangible improvements in people’s lives.

This raises a fundamental question that has received far less attention than it deserves: What kind of Eritrea do we want to build, and what institutions will be required to build it? Behind this question lies a series of related challenges. How should economic transformation be organized, coordinated, and sustained? What institutional arrangements can simultaneously promote growth, equity, and national cohesion? How can economic policy create opportunities across regions, communities, and social groups while strengthening the foundations of a shared national future? These are not merely technical questions of economic management. They are central to the broader task of nation-building.

In my previous articles, I argued that the developmental state offers the most promising framework for addressing these challenges. Compared with the predatory state, the neoliberal market model, and the mixed-economy alternatives, the developmental state provides the most coherent approach to achieving structural transformation, broad-based growth, and social inclusion. This view draws on the historical experience of successful developmental states and on my own experience working in Vietnam and visiting other East Asian economies.

The purpose of this article, however, is not to defend the developmental state anew. That argument has been developed elsewhere. Rather, it is to examine the developmental objectives that should guide Eritrea’s future and to explore how a developmental-state framework might reconcile growth, equity, and national cohesion in a post-transition Eritrea. If the developmental state provides a promising means, we must still clarify the ends it is intended to serve. Before Eritreans can determine how to develop, they must first confront a more fundamental question: What kind of Eritrea do we want to build?

This article proceeds in nine sections. Section 1 sets out a vision of a prosperous, equitable, and united Eritrea and identifies the defining features of the developmental path that could realize it. Section 2 argues that growth with equity, rather than growth alone, should be the central developmental objective, and considers what this requires of a developmental state. Section 3 turns to Eritrea’s diversity, contending that the source of division is not difference itself but exclusion from opportunity. Sections 4 to 6 analyze three interrelated constraints on inclusive development, namely regional disparities, inequality, and poverty, while making the case for balanced regional development as a central component of national transformation. Section 7 considers human capital and capability development as the source of both productivity and opportunity, and Section 8 turns to the middle class, assessing its emergence as the foundation of lasting prosperity. Section 9 draws these themes together, showing how growth, equity, and national cohesion reinforce one another and underpin national transformation.

1.0 A Vision of a Prosperous, Equitable, and United Eritrea

Across the Horn of Africa, political transitions have repeatedly demonstrated that removing a government and building a successful nation are not the same thing. Governments may fall while poverty persists. Political systems may change while institutions remain weak. New leaders may emerge while inequality, unemployment, and economic stagnation continue unchanged. Sudan’s 2019 uprising ended Omar al-Bashir’s thirty-year rule, yet the country has been at war since 2023 and now faces the world’s largest displacement crisis, with about nine million people displaced inside its borders (UNHCR). South Sudan became independent in 2011, but the World Bank estimates that by 2024 more than nine in ten of its people lived in poverty, up from about seven in ten in 2016. Ethiopia’s new prime minister took office in 2018 promising sweeping reform, yet growth slowed from 9 percent in 2019 to 2 percent in 2021 (IMF), and war broke out first in Tigray in 2020 and then in Amhara in 2023.

Political transition may open the door to development, but development does not follow automatically from political change.

This article builds on earlier discussions of the developmental state, institution-building, agricultural transformation, industrialization, human capital development, and nation-building, including the case for a democratic developmental state made in “Halima’s Dilemma: Dignity, Democracy and Development.” The central argument running through those discussions has been simple: successful development is not an automatic consequence of political change. It requires a coherent national strategy capable of transforming resources into productivity, productivity into rising incomes, and rising incomes into broad-based prosperity. The democratic developmental state serves as the political premise, and the focus falls on the economic and social content of the path: growth with equity. In this section, national transformation means the process through which Eritrea converts its productive potential into shared prosperity, strengthens national cohesion, and expands the human talent of its people.

For Eritrea, this challenge carries particular significance. The country’s future will not be determined solely by the outcome of a political transition whenever it occurs. It will also be shaped by whether Eritreans can build capable institutions, modernize agriculture, promote industrialization, create productive employment, mobilize the talents of women and youth, reduce regional disparities, and develop an economy capable of supporting a broad-based middle class. In other words, the central question is not merely who governs Eritrea, but what kind of nation Eritreans wish to build and what developmental path can best achieve that goal.

This challenge is made more complex by Eritrea’s own geographic and social realities. The country encompasses a narrow coastal plain along the Red Sea, a temperate central highland plateau, and extensive western lowlands stretching toward the Sudanese border. These distinct ecological zones possess different productive potentials, infrastructural requirements, and development challenges. Eritrea is also home to diverse linguistic, religious, and cultural communities whose talents and aspirations constitute one of the country’s greatest assets. In such a setting, national development cannot be measured solely by aggregate economic indicators, which often conceal important disparities in opportunity, capability, and access. The success of any future development strategy will depend upon its ability to mobilize the energies and potential of all citizens, regardless of region, religion, ethnicity, gender, or social origin.

National development must therefore be inclusive in both process and outcome. Prosperity concentrated in one region while others remain marginalized would not constitute genuine national development. Nor would a pattern of growth that benefits only particular groups, sectors, or communities. A prosperous, equitable, and united Eritrea requires a development strategy that expands opportunities broadly enough for all citizens to perceive themselves as participants in a common national endeavor. Unity does not mean the absence of difference, nor does it refer only to the territorial integrity that Eritreans have long defended. It means the confidence of every citizen, in every region and community, that the nation’s progress is also their own. National cohesion is the strength of that confidence. Unity in this sense is not a condition to be assumed but an outcome to be built, through institutions that treat citizens fairly and an economy that offers opportunity to all.

What, then, should be the defining features of that path?

1.1 Economic Growth that Creates Productive Employment: A prosperous Eritrea must be one in which economic growth generates productive jobs rather than merely increasing aggregate output. Development should expand opportunities for workers, entrepreneurs, farmers, and professionals alike. The ultimate measure of success is not simply economic growth, but whether growth enables citizens to improve their livelihoods and realize their potential.

1.2 Modern Agriculture, Industry, and Services: Eritrea’s future depends upon a transformation of its productive structure. Agriculture must become more productive and resilient. Industry must expand beyond its current limitations and generate opportunities for value addition and exports. Services must evolve to support a modern economy. Sustainable development requires progress across all three sectors.

1.3 Investment in Education, Skills, and Human Talent: No nation develops beyond the capabilities of its people. Eritrea’s most valuable resource is not its minerals or its land but its human capital. Long-term prosperity will depend on investments in education, technical training, scientific capability, entrepreneurship, and innovation, particularly among the country’s youth.

1.4 Equal Opportunity Across Regions and Communities: Development must reach all regions of the country and create opportunities for all Eritreans, regardless of region, religion, ethnicity, gender, or social background. Large disparities in economic opportunity can undermine both social cohesion and national integration. Investments in infrastructure, connectivity, education, and public services should therefore ensure that no region or community is permanently excluded from the benefits of development.

1.5 Strong National Unity and Cohesion: Economic development should strengthen rather than weaken national solidarity. Development policies should foster shared opportunities, mutual trust, and a sense of common purpose among Eritrea’s diverse communities. Growth that benefits only a few regions or groups risks deepening division; growth that expands opportunity broadly can reinforce national cohesion. This is the unity on which the vision depends.

Shared prosperity is not only a matter of social justice; it is also a foundation of political stability, national integration, and long-term development.

These outcomes will not materialize on their own. They depend on capable institutions and the partnership of key sectors of society.

1.6 A Capable Developmental State: Markets alone do not transform economies, nor can development be achieved through state control alone. Eritrea needs a capable developmental state able to formulate strategy, coordinate investments, build institutions, and support structural transformation while remaining accountable and responsive to society.

1.7 A Dynamic Private Sector: The private sector must be a partner in development. Entrepreneurs, small businesses, investors, and producers are essential drivers of innovation, productivity, and job creation. The role of the state is not to replace markets but to create the institutional conditions under which productive private initiative can flourish.

1.8 Constructive Diaspora Engagement: Among Eritrea’s most important developmental assets is its diaspora, which represents a valuable reservoir of human capital, professional expertise, international networks, and financial resources. Beyond remittances, the diaspora can contribute skills, knowledge, investment, technology transfer, and international networks. Harnessing these resources effectively will require institutions capable of building trust and encouraging long-term engagement.

1.9 Integration into Regional and Global Markets: A future Eritrea cannot prosper in isolation. Sustained development will require engagement with regional and global markets through trade, investment, learning, and technological exchange. Economic openness, managed strategically and in accordance with national priorities, can accelerate structural transformation and raise productivity.

These objectives define a vision of a prosperous, equitable, and united Eritrea. They describe more than an economic strategy; they describe a national aspiration. Political transition may create the possibility of a new beginning, but development determines whether that beginning leads to broad-based prosperity. A political transition is a turning point; developmental transformation is the long road that follows. Eritrea must prepare for both, but especially for the latter.

A vision of a prosperous, equitable, and united Eritrea will not emerge automatically from political change alone. Democratic governance, constitutionalism, and the rule of law are essential foundations, but they do not in themselves create jobs, raise productivity, modernize agriculture, or expand economic opportunity. These achievements require capable institutions, strategic coordination, long-term investment, and sustained commitment to development. The challenge facing Eritrea is therefore larger than a political transition. It is the challenge of national transformation.

2.0 Growth with Equity as the Developmental Objective

The objective of development is neither growth alone nor equity alone. Eritrea’s challenge is to achieve growth with equity: a pattern of development that expands productivity, employment, and wealth creation while broadening access to opportunity across regions, communities, and social groups. Equity does not mean that everyone achieves the same outcomes. Rather, it means that all citizens, regardless of region, gender, ethnicity, religion or social background, have fair access to the opportunities and capabilities needed to contribute to national development and share in its rewards.

Eritrea’s development strategy must avoid two common errors. The first is to treat economic growth as an end in itself. The second is to pursue social objectives without creating the productive foundations needed to sustain them. Growth alone does not constitute development. A country may record impressive increases in output while significant segments of its population remain excluded from quality education, healthcare, productive employment, and meaningful participation in economic life. Equally, social objectives cannot be sustained without growth. Growth remains indispensable because it generates the resources required for investment, infrastructure, industrialization, technological upgrading, and rising living standards.

Development, properly understood, involves more than increasing production. It involves expanding the skills and opportunities, choices, and opportunities available to citizens. Economic transformation succeeds not simply when economies grow larger, but when increasing numbers of people acquire the means to improve their lives and contribute productively to society. The task of development is therefore to create the conditions under which individuals, households, entrepreneurs, workers, farmers, and communities can fully realize their productive potential and contribute to national progress.

This understanding challenges the common assumption that efficiency and fairness are competing objectives. The experience of successful developmental states suggests otherwise. Sustained economic transformation has typically depended not only on rapid growth but also on institutions that enable broad participation in that growth. When opportunities are widely accessible, more citizens can acquire skills, establish businesses, adopt new technologies, and invest in productive activities. Growth becomes stronger because it draws upon a wider pool of talent, initiative, and creativity.

Equity is therefore not merely a social objective; it is also a developmental objective. A society that excludes large segments of its population from economic opportunity leaves valuable human talents and productive resources underutilized. Communities lacking access to infrastructure, individuals denied opportunities for advancement, and regions bypassed by investment represent productive potential that remains unrealized. Far from hindering development, greater inclusion enlarges the number of people capable of contributing to national prosperity.

For Eritrea, the challenge is therefore not to choose between growth and equity but to construct a developmental framework in which the two reinforce one another. A strategy that concentrates opportunities, public investment, or productive capacity within a limited number of regions, sectors, or social groups may generate short-term gains, but it risks creating structural inequalities that weaken long-term transformation. Exclusion undermines social cohesion, narrows the country’s productive base, and reduces the capacity of citizens to contribute to national development.

The most successful developmental experiences suggest that sustained progress depends on both productive transformation and broad social inclusion. Competitive industries, technological upgrading, productive enterprises, and rising productivity are essential, but so too are education, social mobility, institutional trust, and a shared sense of national purpose. Properly understood, growth and equity are mutually reinforcing pillars of successful development.

Eritrea’s developmental state must therefore pursue both economic advancement and human development. It must generate the gains of development while ensuring that citizens possess the skills and opportunities needed to participate in creating them. Growth with equity is not simply a matter of social justice. It is a prerequisite for durable economic transformation, national cohesion, and long-term prosperity.

2.1 Developmental States and the Risks of Failure

The developmental state is not a guarantee of success. Historical experience shows that developmental strategies have sometimes produced significant inequalities, particularly when rapid growth outpaced efforts to broaden opportunity and social inclusion. In other cases, developmental ambitions failed because state institutions lacked the capacity, accountability, or political commitment needed to sustain long-term transformation. Some governments adopted the language of developmentalism without creating the capable public institutions, productive private sectors, and performance-oriented governance upon which successful developmental states depend. The lesson is not that developmental states are destined to fail, but that success requires more than state intervention alone. It requires capable institutions, broad social participation, accountability, and a sustained commitment to ensuring that the gains of growth are widely shared. For Eritrea, the objective should therefore be not merely growth, but growth with equity pursued through democratic and effective institutions.

Eritreans are therefore not merely beneficiaries of development but the primary agents of national transformation.

3.0 Diversity Is Not the Problem; Exclusion Is

Eritrea contains considerable diversity in geography, livelihoods, language, religion, and economic endowments. The experience of successful societies demonstrates that diversity becomes a challenge only when political, economic, or social institutions exclude particular regions, communities, or groups from meaningful participation in national life. The issue is therefore not diversity itself but whether development is inclusive.

Countries rarely become unstable because their citizens differ from one another. They become unstable when large segments of society believe that opportunities, resources, and influence are distributed unfairly. Difference becomes a source of tension typically when institutions fail to provide a framework of inclusion and shared opportunity. Exclusion, not diversity, transforms differences into grievances, particularly when it falls along regional, ethnic, or religious lines.

Despite differences in region, religion, language, and livelihood, communities can pursue common national goals when they have a meaningful stake in a shared future. National cohesion depends less on cultural uniformity than on whether citizens perceive themselves as stakeholders in a shared process of national development. This principle is particularly relevant in Eritrea, where social and geographic diversity need not impede collective progress if institutions ensure broad participation and shared opportunity. Development therefore serves not only an economic function but also a nation-building function. When opportunities expand across regions and communities, diversity becomes a source of strength rather than division.

Diversity in itself is not an obstacle to development.

3.1 Equal Opportunity and the Utilization of National Talent

The developmental costs of exclusion are substantial. Societies characterized by persistent exclusion often suffer from inefficiency, social fragmentation, weakened institutional legitimacy, and underutilized human potential. Productive potentials remain untapped not because they do not exist, but because individuals and communities lack access to the opportunities needed to develop and apply them. Inclusive development strengthens both economic performance and social cohesion by widening participation in the national development process.

The challenge of inclusion extends beyond the distribution of income. It concerns access to the capabilities and opportunities that allow citizens to participate productively in national development. Education is one element of this process, but so too are infrastructure, healthcare, finance, technology, markets, and public investment. A developmental state succeeds when opportunities are not determined by geography, ethnicity, language, religion, gender, or social origin, but by the ability of citizens to develop and apply their talents.

An Eritrean child born in a remote village of Eritrea’s northern Sahel region, a pastoral community in the western lowlands, an agricultural settlement in the central highlands, a fishing village along the Red Sea coast, a market town in the eastern escarpments, or an urban neighborhood in Asmara should enjoy an equal opportunity to realize his or her potential. The future engineer, entrepreneur, scientist, physician, teacher, artist, or public servant may emerge from any region, language group, religious community, or social background. A nation that allows talent to remain constrained by geography, inadequate infrastructure, limited educational opportunities, or unequal access to productive resources squanders some of its most valuable assets. A nation that broadens access to opportunity expands both individual prospects and its own developmental capacity.

3.2 Social Cohesion and the Effectiveness of the Developmental State

Inclusive opportunity also strengthens the effectiveness of the developmental state. Citizens are more likely to support ambitious developmental policies when they perceive public investment and economic opportunity as serving national rather than sectional interests. A farmer in the highlands, a pastoralist in the lowlands, a fisherman along the coast, and an entrepreneur in an urban center should each be able to recognize a meaningful place for themselves within the national development endeavor.

When development is experienced as a shared process rather than as a selective benefit, confidence in public institutions deepens and collective commitment to long-term national goals becomes easier to sustain. Social cohesion is therefore not merely a political asset. It is also a developmental asset, enabling governments to mobilize cooperation, coordinate collective action, and pursue long-term transformation more effectively.

3.3 Diversity as a Developmental Asset

For Eritrea, the central challenge is not how to overcome diversity but how to ensure inclusion. A developmental strategy that broadens access to education, infrastructure, markets, finance, technology, and productive participation transforms diversity from a potential source of division into a source of resilience, creativity, and economic dynamism.

The ultimate measure of success will not simply be higher levels of production, income, or exports, but the extent to which all citizens are able to contribute to and benefit from the Eritrea’s development. Economic transformation and national cohesion are strongest when no region, community, or social group is left outside the development process.

Diversity is not a developmental liability. Properly harnessed through inclusive institutions and broad-based opportunity, it becomes one of the nation’s greatest assets.

4.0 Regional Disparities and Spatial Equity

Regional disparities represent one of the most significant challenges to Eritrea’s long-term development. They influence the distribution of infrastructure, investment, markets, employment opportunities, and productive activity across the national territory. From a developmental-state perspective, regional development is not merely a question of distributive fairness. It is also a question of mobilizing the productive capacities of the entire country.

These disparities are deeply rooted in history. Patterns of colonial investment, the dismantling of productive assets during successive administrations, and the disruption caused by decades of conflict contributed to an uneven geography of development. The legacy of these processes remains visible in differences in infrastructure, market access, and economic opportunity across regions.

The objective of regional development, however, should not be territorial uniformity. Spatial equity does not require every region to possess the same industries or identical levels of economic activity. Rather, it requires that all regions have meaningful access to infrastructure, markets, public services, and opportunities for productive participation. Regional development is therefore best understood as an undertaking of national integration as well as of productive mobilization.

Economic geography shows that industry often concentrates in particular locations, because firms benefit from proximity to suppliers, workers, infrastructure, and markets. The appropriate response is not to scatter industry evenly across the map. Instead, industrial parks should be built in a limited number of well-located towns. These growth poles, the cities or zones where industry clusters, must remain connected to the wider economy through transport, services, and opportunities for workers from other regions. Their gains must also be widely shared. The challenge is not concentration itself but the exclusion of other regions from its benefits.

Connection alone, however, is insufficient. Eritrea’s diverse geography provides the basis for regional specialization. The western lowlands possess significant agricultural and livestock potential, the highlands offer advantages in manufacturing and services, while the Red Sea coast provides opportunities in fisheries, logistics, tourism, maritime services, and renewable energy. Development should build upon these distinctive strengths while deepening the infrastructure and market linkages that connect them.

The developmental challenge is therefore to create a nationally integrated economy in which regions specialize according to their evolving comparative advantages while remaining connected through transport, energy, telecommunications, and market networks. When regional development is approached in this manner, regional diversity becomes an economic asset rather than a source of fragmentation, and spatial equity becomes a mechanism for expanding national productive capacity rather than merely redistributing existing resources.

Regional development should therefore be understood as both a process of national integration and a strategy for mobilizing the country’s productive capacities.

5.0 Inequality and Inclusive Development

Inequality is often viewed primarily as a social or moral concern. It is certainly that. Yet it is also a significant developmental challenge. Inequality refers chiefly to unequal access to opportunities and capabilities, though differences in income and wealth are closely linked to it.

When opportunities are concentrated among a relatively small segment of society, a country fails to utilize its full productive potential. The problem is not simply that some individuals possess more resources than others. The deeper problem is that large numbers of citizens are prevented from contributing fully to economic life.

A farmer without access to irrigation cannot reach full productivity. A young person without access to quality education cannot develop valuable skills. A small entrepreneur without access to finance cannot expand a business. A remote community without adequate infrastructure cannot connect effectively to markets. In each case, productive potential exists but remains underutilized.

Each of these cases is a form of economic potential left unrealized, as are regions bypassed by investment. A development strategy that fails to mobilize these capacities limits its own prospects for sustained growth.

For Eritrea, inequality is therefore not merely a social concern. It is a significant constraint on productivity, innovation, and national development.

5.1 Women’s Economic Participation and National Development

The economic participation of women is one of the most important yet underutilized sources of national development. Eritrea cannot fully realize its productive potential while barriers continue to limit the contribution of half its population. For a developmental state committed to growth with equity, expanding women’s economic opportunities is an economic necessity.

Women have long contributed to Eritrea’s agriculture, livestock production, petty trade, public service, and community life. Their role was also evident during the liberation struggle, where women assumed responsibilities that challenged traditional social boundaries. Yet many continue to face constraints in accessing finance, technology, training, markets, and productive assets. The issue is therefore not participation itself, but the conditions under which participation occurs.

These constraints are especially significant in the rural economy, where agriculture remains central to livelihoods. Women’s limited access to land, irrigation, improved inputs, extension services, and modern technologies can reduce productivity and slow agricultural transformation. Removing such barriers would strengthen both household incomes and national food production.

In urban areas, access to technical education, vocational skills, finance, and formal employment remains critical for expanding opportunities in higher-productivity sectors. Broader participation would enlarge the pool of entrepreneurs, professionals, and skilled workers needed to support economic diversification and modernization.

Gender inclusion is equally important for human-capital development. When girls and women have greater access to education, skills training, healthcare, and economic opportunity, the country benefits from a larger base of talent, knowledge, and innovation. Skills and opportunities that might otherwise remain underutilized become assets for national development.

Expanding women’s economic opportunities is therefore both a matter of equity and a practical development strategy.

A developmental state that fully mobilizes the talents and capabilities of women alongside those of men strengthens productivity, broadens opportunity, and lays firmer foundations for long-term inclusive growth.

5.2 How Inequality Constrains Development

Inequality constrains development through several important economic channels.

First, it can weaken domestic demand. When large segments of the population have limited income and purchasing power, domestic markets remain small. Firms have fewer incentives to invest, expand production, or introduce new products because consumer demand is constrained.

Second, inequality can limit the development of human talents. Unequal access to education, healthcare, nutrition, finance, skills training, and economic opportunities prevents many citizens from reaching their productive potential. Talent remains underdeveloped not because it is absent, but because opportunities are unevenly distributed.

Third, inequality can result in the underutilization of productive resources. Individuals with the ability to become entrepreneurs, skilled workers, professionals, or innovators may lack access to the resources and opportunities needed to develop their capabilities. The economy consequently fails to fully benefit from the talents and contributions of a significant share of its population.

These mechanisms show why inequality is a developmental issue rather than merely a distributive one. By limiting demand, constraining human-capital formation, and leaving productive capacities underutilized, inequality reduces the economy’s ability to achieve sustained and broad-based growth.

5.3 National Cohesion and Equality of Opportunity

While inequality affects economic performance, its implications extend beyond economics alone. Unequal access to education, healthcare, infrastructure, finance, technology, and public services can shape how citizens experience opportunity and participation in national life. When such disparities persist, developmental gaps may widen across regions, communities, and social groups.

For a diverse society such as Eritrea, the challenge is not simply reducing material disparities but ensuring that all citizens perceive themselves as having a meaningful stake in the country’s future. Development is ultimately a collective enterprise. Citizens are more likely to support long-term national objectives when opportunities and public resources are seen as accessible on a fair and impartial basis.

National cohesion is therefore an important developmental asset. Sustaining it requires institutions that are widely regarded as inclusive, impartial, and responsive to the needs of the population as a whole. Confidence that advancement depends on effort, ability, and opportunity rather than social background or geographic location can strengthen public trust and encourage broader participation in national development.

Promoting equity, by reducing inequality and expanding equality of opportunity, is therefore not only an economic objective but also a nation-building imperative. Eritrea’s developmental state succeeds not merely by increasing production and income, but by ensuring that the opportunities created through development are broadly accessible across regions, communities, and social groups. In this way, equity strengthens national cohesion, reinforces institutional legitimacy, and supports the shared sense of purpose upon which long-term development depends.

6.0 Poverty Reduction and Human Development

Poverty is often understood simply as a shortage of income. It is also a shortage of capability, opportunity, and access. A farmer who cannot reach a market, a graduate with no prospect of a job, and a family that cannot afford healthcare are all poor in ways that income figures alone do not capture. Many Eritrean households face structural barriers that limit their prospects despite individual effort. Rural communities struggle with low agricultural productivity, climatic uncertainty, limited market access, and infrastructure deficiencies. Urban households confront unemployment, underemployment, housing shortages, and limited formal-sector opportunities.

These conditions frequently create what development economists describe as a poverty trap. Low incomes constrain consumption and savings. Weak demand discourages investment. Low investment limits productivity growth. Low productivity, in turn, keeps incomes low. The cycle reinforces itself.

Breaking such a cycle requires more than temporary assistance. It requires structural transformation capable of improving productivity, expanding opportunity, and creating pathways for economic mobility. The reduction of poverty is therefore not simply a humanitarian objective. It is both an outcome and a condition of sustained national development.

Social protection and developmental action serve different purposes. Social protection, such as food assistance, cash transfers, or emergency relief, cushions households against hardship and prevents deprivation from deepening; remittances from family abroad often play a similar role privately. It is necessary, but it does not by itself change the conditions that produce poverty. Eritrea’s developmental state should go further by investing in the sources of productivity: rural infrastructure and irrigation, access to credit and extension services for smallholders, education and vocational training linked to real jobs, and policies that generate productive and meaningful employment. The aim is to move households from dependence on assistance toward sustained participation in the economy. In this sense, protection addresses the symptoms of poverty, while developmental strategy addresses its causes.

Poverty and inequality are closely linked. Where wealth, assets, and opportunities are unevenly distributed, poverty tends to become more widespread and persistent. At the same time, poverty limits social mobility and restricts access to the capabilities needed for economic advancement, thereby reinforcing existing inequalities. The two are best understood as aspects of a single developmental problem. Inequality concerns how opportunities are distributed, while poverty concerns the resulting lack of access to them.

For Eritrea’s developmental state, addressing poverty is therefore more than a matter of social protection. It is a means of expanding access to opportunity, widening participation in economic transformation, and ensuring that the benefits of growth are broadly shared. A practical test is whether a rural household and a young urban jobseeker can each see a realistic path to a better livelihood.

Poverty reduction is not merely a humanitarian objective. It is also a development imperative.

6.1 Poverty as a Structural and Multidimensional Condition

In Eritrea, poverty is structural and multidimensional. It comes from barriers in the economy, in institutions, and in access to services, not only from the circumstances of individual households. These barriers are shaped by geography, livelihood systems, limited productive capacity, and unequal access to economic opportunity. Although comprehensive and current poverty data are lacking, partial evidence from international agencies and the widely reported living conditions of Eritrean households and communities indicate that poverty continues to constrain both human development and economic transformation.

Poverty is also multidimensional. It extends beyond income to include inadequate access to food, clean water, shelter, healthcare, education, sanitation, infrastructure, and economic opportunity. Households experience deprivation differently depending on location, livelihood, gender, age, and access to productive assets.

A further distinction exists between transient and chronic poverty. Some households experience transient poverty caused by drought, illness, unemployment, or other shocks. Others face persistent poverty rooted in deeper structural constraints such as weak infrastructure, geographic isolation, limited assets, low educational attainment, and restricted market access. The distinction matters because transient poverty calls mainly for protection and resilience, while chronic poverty calls mainly for structural transformation.

Poverty also has a strong geographic dimension. Agricultural communities in the highlands face challenges different from those confronting pastoralists in the eastern lowlands or agro-pastoral communities in the western lowlands. Poverty exists across all regions, but its causes and manifestations vary according to climate, infrastructure, market access, and livelihood systems. Effective poverty reduction therefore requires both a national strategy and policies adapted to regional realities.

6.2 Structural Drivers of Poverty

Poverty persists not because of a single constraint but because several barriers reinforce one another. The following sections show how these barriers operate in rural and urban areas.

6.2.1 Rural Poverty

Agriculture remains the primary source of livelihood for much of Eritrea’s population, yet agricultural productivity is low. Dependence on rain-fed farming leaves many households vulnerable to climatic variability and drought. Limited irrigation, inadequate water management, restricted access to improved inputs, low mechanization, and insufficient extension services constrain production and income.

Infrastructure gaps further deepen these challenges. In remote areas, inadequate transport networks, weak market connectivity, unreliable energy supplies, and limited access to financial services increase the costs of production and exchange. Farmers, fishers, and pastoralists often struggle to access markets, obtain inputs, or secure fair prices.

The productive capacity of many rural communities is also constrained by the absence of a significant share of the working-age population, limiting entrepreneurship, innovation, and the adoption of more productive techniques. The result is the poverty trap described earlier, in which low productivity, low income, and limited asset accumulation reinforce one another.

Reducing rural poverty therefore requires higher productivity, stronger market integration, improved infrastructure, and expanded economic opportunities.

6.2.2 Urban Poverty

Poverty in Eritrea is not exclusively a rural phenomenon. Urban poverty presents its own challenges, shaped by unemployment, underemployment, housing shortages, and limited access to productive opportunities.

Industrial development is minimal and the private sector is very small, so the economy has generated too few formal jobs. Many households therefore depend on irregular, low-productivity, or informal economic activities that provide subsistence but offer limited prospects for advancement.

Housing shortages, pressure on public services, and uneven access to water, sanitation, and healthcare further increase vulnerability. In the absence of strong social protection systems, urban households can be highly exposed to shocks such as illness, unemployment, or inflation.

Like rural poverty, urban poverty ultimately reflects limitations in productive opportunity. Reducing urban poverty therefore depends on creating productive employment, expanding housing, strengthening infrastructure, and improving public services such as health care, education, and water and sanitation.

6.3 Human Capital and the Poverty Trap

Although rural and urban poverty take different forms, they share a further constraint that reinforces the others: human capital.

From Eritrea’s developmental-state perspective, education, skills, health, and training are not merely social outcomes. They are productive assets. Limited access to quality education, technical training, and healthcare reduces productivity and restricts economic mobility. Individuals lacking these capabilities often remain confined to low-productivity activities despite their effort or potential.

The consequences extend beyond individual households. Weak educational quality, skill shortages, and poor health weaken the country’s productive base and limit its capacity for technological adaptation and economic transformation.

These constraints form part of the poverty trap. Low incomes limit savings and investment. Weak demand reduces market size. Small markets discourage investment and job creation. Low investment suppresses productivity growth, which in turn reproduces low incomes. Limited human capital adds a further link: low incomes restrict households’ ability to invest in education, health, and skills, which keeps productivity, and therefore incomes, low. Poverty thereby becomes self-reinforcing.

Breaking the poverty trap requires expanding both productive capacity and effective demand. It requires investment in human capital, financial inclusion, employment creation, and the productive sectors capable of generating sustainable livelihoods.

6.4 Poverty, Inclusion, and National Cohesion

Poverty has implications that extend beyond economics. It also affects national cohesion.

Because Eritrea’s regions differ in geography, infrastructure, climate, and economic opportunities, poverty is unlikely to be distributed evenly. Even where disparities arise from geography rather than deliberate exclusion, persistent differences in opportunity can generate perceptions of marginalization and neglect.

Communities facing long-term deprivation may reasonably feel disconnected from national progress if development appears concentrated elsewhere. Poverty therefore carries both economic and social consequences.

For this reason, poverty reduction must be inclusive and nationwide in reach. The benefits of development must reach the highlands, the eastern and western lowlands, coastal communities, and urban centers alike.

Eritrea’s developmental state succeeds when citizens possess the skills and opportunities necessary to participate productively in economic life. Poverty reduction therefore serves a broader purpose than raising living standards alone. It expands human capabilities, strengthens social cohesion, and widens participation in the national project of development. In this way, Eritrea can more fully mobilize its human potential and build the foundations for sustained and inclusive prosperity.

7.0 Human Capital and Capability Development

Economic development ultimately depends on people. Infrastructure, technology, investment, and institutions matter greatly, but their effectiveness depends upon the skills and knowledge of the citizens who use them. Eritrea cannot achieve sustained prosperity if large parts of its population lack the knowledge, skills, health, and opportunities necessary to participate productively in economic life.

For this reason, human capital should be understood not merely as a social objective but as a productive asset. Education, technical skills, and health increase productivity, strengthen innovation, and enhance a society’s ability to adapt to economic and technological change. In this section, human capital refers to the knowledge, skills, and health embodied in individuals, while capabilities refer to the real opportunities citizens have to develop and apply them. The most successful developmental states invested heavily in their people because they recognized that human capital is one of the most important foundations of long-term growth.

A developmental approach to education extends beyond literacy or school enrollment. Its objective is to equip citizens with the skills and knowledge needed in a modern economy. This includes quality primary and secondary education, technical and vocational training, scientific and technological competencies, and opportunities for lifelong learning. What matters is not the number of years spent in school, but what students actually learn. Human capital development succeeds when individuals can continuously acquire and apply new skills as economic conditions evolve.

Health is equally important. Poor health reduces productivity, weakens educational outcomes, limits labor-force participation, and increases economic vulnerability. Investments in healthcare and nutrition, particularly in early childhood, therefore, contribute not only to individual well-being but also to national productive capacity. A healthy population is better able to work, learn, innovate, and participate in economic transformation.

Human capital, however, yields returns only when the economy can absorb it. Skills create value only when citizens have the real opportunity to apply them. Skills without productive employment lead to underemployment, frustration, and emigration, while productive enterprises without skilled workers cannot upgrade or compete. Education and training policy must therefore be coordinated with industrial, agricultural, and services strategy, so that the supply of skills expands in step with the demand for them. This coordination is a defining task of Eritrea’s developmental state.

For Eritrea, the task has a further dimension: retaining and mobilizing talent. The emigration of young and educated Eritreans represents a loss of human capital, while the diaspora holds skills and knowledge that could contribute to national development. A developmental strategy should therefore aim to create economic and political conditions in which Eritreans can build their futures at home and in which those abroad can contribute with confidence.

The developmental significance of human capital extends beyond economic growth. Expanded capabilities increase social mobility when they are broadly shared, so that opportunity is determined less by family background, gender, ethnicity, or region and more by talent, effort, and achievement. A society that develops the talents of all its citizens makes more effective use of its human resources while creating stronger foundations for inclusion and national cohesion.

Human capital development is thus more than one policy priority among many. Eritrea’s developmental state will be judged not only by the roads, factories, and institutions it builds, but by whether its people can develop and apply their capabilities. These capabilities are the foundation upon which poverty reduction, productivity growth, innovation, social mobility, and middle-class formation depend.

Eritrea cannot achieve sustained prosperity when significant portions of its population lack the knowledge, skills, health, and opportunities necessary to contribute productively to the economy.

8.0 A Broad-Based Middle Class: The Foundation of Shared Prosperity

The ultimate test of growth with equity is the creation of a broad-based, productive, and resilient middle class. Development is most meaningful not when national income rises in the aggregate, but when ordinary citizens gain the capacity to build secure and dignified lives. For Eritreans, this transformation represents more than a change in income. It signifies expanded capabilities, greater economic security, and broader participation in the nation’s development. It reflects the desire for stable employment, adequate housing, quality education for one’s children, access to healthcare, the ability to save and invest, and protection against economic shocks. It is the hope that effort, skill, and enterprise will translate into opportunity and upward mobility.

In this sense, middle-class formation is the human face of development. Roads, factories, schools, irrigation systems, and public institutions are not ends in themselves. Their purpose is to expand the capabilities and life chances of citizens. Eritrea achieves genuine national transformation when increasing numbers of households move from vulnerability to security, from subsistence to productivity, and from dependence to self-reliance.

No reliable public estimate of the size of Eritrea’s middle class exists, so this discussion focuses on structure rather than statistics. In this article, “middle class” does not mean a particular income level. It describes households that have stable livelihoods, productive assets, and the means to invest in their children’s future. A middle class is broad-based when such households are found across regions, communities, and sectors rather than concentrated in a few. Middle-class formation is therefore better understood as a developmental process than as a demographic category.

8.1 Why a Broad-Based Middle-Class Matters

Historically, successful developmental states have not merely generated economic growth; they have expanded the number of citizens able to participate meaningfully in economic life. Development became transformative because rising productivity, expanding employment, and increasing educational attainment produced a broad middle class rather than narrow islands of prosperity. A broad middle class contributes to development in five ways.

Economically, it can expand domestic demand, creating larger markets for goods and services. As households acquire greater purchasing power, firms gain stronger incentives to invest, innovate, and expand production.

Socially, a large middle class can promote stability and reduce polarization by broadening access to opportunity and widening the circle of citizens who benefit from national prosperity.

Inclusively, a broad middle class can strengthen national cohesion by extending economic opportunities across regions and communities. When citizens from different linguistic, religious, and regional backgrounds participate meaningfully in economic life, shared interests reinforce a common stake in the nation’s future.

Institutionally, a broad middle class can strengthen support for effective governance, predictable rules, and long-term policy continuity.

Fiscally, it can broaden the tax base necessary to finance infrastructure, education, healthcare, and technological upgrading.

Beyond these functions, the middle class consists of households who have a direct stake in national development because they invest in education, establish businesses, purchase homes, accumulate assets, and plan confidently for the future. The significance of the middle class therefore extends beyond private prosperity. It becomes one of the principal foundations upon which durable development rests.

For these reasons, “broad-based” must mean broad across regions, communities, and genders, as well as broad in numbers. Such a class does not emerge on its own. It must be cultivated through deliberate policy, which is why it is a task for Eritrea’s developmental state.

8.2 Pathways to Middle-Class Formation

The pathways to middle-class formation have been examined in earlier sections of this article or in previous articles. Agricultural transformation raises rural incomes and enables households to move beyond subsistence production. Industrialization expands productive employment and creates opportunities for upward mobility. Financial inclusion allows households to transform earnings into savings and productive assets. Human capital development equips citizens to participate in increasingly sophisticated economic activities.

Balanced regional development broadens opportunity across regions, while efforts to reduce inequality and poverty enable larger numbers of citizens to participate in economic transformation. Effective institutions coordinate these processes and sustain them over time.

Taken individually, each of these policies addresses a specific developmental challenge. Taken together, they constitute the architecture of middle-class formation. Their importance lies not merely in increasing growth rates, but in expanding the number of households able to achieve economic security, accumulate assets, invest in future generations, and participate productively in national development.

Middle-class formation should therefore be understood not as a separate policy objective alongside economic transformation, but as the social outcome through which the success of that transformation is measured, and which in turn helps sustain it. Cultivating a middle class means pursuing these policies together.

8.3 The Middle Class and National Cohesion

For Eritrea, the significance of middle-class formation extends beyond economics to the broader task of building national cohesion across diverse regions, communities, and livelihood systems. The country’s development challenge is inseparable from this task. Eritrea’s diverse communities rely on livelihoods ranging from highland farming to lowland pastoralism and coastal trade. Growth that benefits only a narrow segment of society risks reinforcing existing inequalities and weakening national cohesion.

A broad-based middle class can serve as an integrating social force. When opportunities for advancement expand across rural and urban areas, across highland and lowland regions, and across different social groups, citizens are more likely to experience development as a shared national achievement rather than the privilege of a few. For lowland, pastoralist, and agropastoral communities, whose livelihoods differ from the highland farming economy, inclusion means development strategies built around their own economies, not one model applied to the whole country. The resulting sense of inclusion can strengthen trust, reduce perceptions of marginalization, and reinforce commitment to common national goals.

A developmental state succeeds not when every region performs identical economic activities, but when all regions possess meaningful opportunities to participate in, contribute to, and benefit from national development. Irrigated farming in the western lowlands, pastoralism, fishing and port services on the Red Sea coast, and industry in the highland towns can each anchor a middle class, provided each has the finance, skills, and market access it needs. Broad-based middle-class formation helps translate that principle into everyday reality.

In this respect, middle-class formation is not merely a consequence of national cohesion. It is one of the mechanisms through which cohesion is built.

8.4 Economic Security, Dignity, and Citizenship

Economic development reaches its fullest expression when it expands not only incomes but also the capabilities of citizens to shape their own futures.

Economic vulnerability often narrows people’s choices. Households preoccupied with daily survival possess fewer resources and less capacity to participate fully in economic, social, and civic life. By contrast, economic security expands individual freedom and enables people to exercise greater control over their futures.

Citizens experience dignity when they can support themselves through productive work, provide for their families, accumulate assets, educate their children, and contribute meaningfully to society. The transition from chronic vulnerability to economic security is therefore simultaneously a transition toward greater self-reliance, confidence, and opportunity. These are the conditions that successful development seeks to extend to an ever-larger share of the population.

Economic security is not a substitute for political rights and civic freedoms. The two reinforce one another, and, as noted in the opening section, democratic governance and the rule of law remain essential foundations. Historically, societies characterized by widespread access to education, economic opportunity, and asset ownership have tended to sustain stronger civic participation and more effective public institutions. As economic security expands, citizens acquire a greater stake in the continued success and stability of national development. They become stakeholders when they possess both achievements to protect and aspirations to advance.

For Eritrea, a citizenry that is secure, productive, skilled, and invested in development should be regarded not merely as a beneficiary of national transformation but as one of its principal drivers. Such a citizenry constitutes a source of national strength capable of supporting stronger institutions, better governance, and more effective public policy.

Economic security does not diminish the importance of liberty; rather, it enables citizens to exercise their freedoms more fully and participate more confidently in public life.

8.5 Retaining Talent and Expanding Opportunity

Middle-class formation is also closely linked to the retention of human capital, discussed in Section 7.0. A society that offers realistic opportunities for advancement is more likely to retain skilled workers, entrepreneurs, professionals, and innovators. For Eritrea the stakes are unusually high. UNHCR is aware of more than 679,000 Eritrean refugees and asylum-seekers abroad, a very large number for a country whose population is estimated at only a few million, and most are young adults. Reports by the United Nations, human rights organizations, and researchers identify indefinite national service and the lack of prospects at home as leading causes of this exodus, a link the government rejects.

When productive employment, educational advancement, asset ownership, and social mobility become attainable, citizens acquire stronger incentives to invest their talents within the national economy, particularly where political and civic conditions also allow them to build their futures at home. In Eritrea, this includes the ability to plan a working life and choose an occupation. Greater opportunity can encourage the retention of talent; retained talent strengthens productivity and innovation; higher productivity supports further growth; and continued, broadly shared growth expands the middle class.

The result is the possibility of a virtuous cycle in which development is increasingly propelled by the capabilities, investments, and aspirations of citizens themselves. For Eritrea the cycle has a further dimension, the diaspora: skills, savings, and networks built abroad could return as investment, expertise, and enterprise, if contributing to national development is made safe, predictable, and rewarding.

8.6 The Ultimate Test of Growth with Equity

A broad-based middle class is both a principal outcome and a safeguard of successful national transformation.

Growth without equity may increase national income while leaving large segments of society excluded from opportunity. Equity without growth may distribute scarcity without creating prosperity. A resilient and inclusive middle class is unlikely to emerge unless productive capacity expands and the resulting gains are broadly shared.

The true measure of developmental success is therefore not simply the number of roads constructed, factories established, or projects completed. It is whether increasing numbers of Eritrean households move into secure, productive, and economically resilient positions within society. It is whether citizens can educate their children, accumulate assets, withstand economic shocks, and participate fully in economic and civic life.

By building a broad-based middle class, Eritrea can create more than a demographic category. It can strengthen economic resilience, national cohesion, institutional stability, civic capacity, and national confidence. In this sense, the middle class is not merely an outcome of successful transformation. It is among its most important foundations and safeguards.

For Eritrea, the emergence of such a middle class is the clearest indication that growth is becoming inclusive, development is becoming socially rooted, and prosperity is becoming nationally shared. It is therefore not simply one development objective among many. It is the tangible expression of growth with equity and one of the strongest foundations upon which a prosperous, cohesive, and confident nation can be built.

9.0 Growth, Equity, and National Transformation

The themes explored in this and earlier articles form parts of a single developmental system. Agricultural transformation, industrialization, financial inclusion, infrastructure investment, human capital development, women’s economic participation, poverty and inequality reduction, balanced regional development, and effective institutions are not separate agendas. They constitute an integrated strategy for expanding productive capacity while broadening participation in economic and social life.

When these elements work together, development becomes cumulative. Rising productivity generates income, investment, and employment. Expanding economic opportunities strengthen household welfare and enlarge the resources available for further investment in education, healthcare, infrastructure, and technological capability. Over time, these mutually reinforcing processes can place Eritrea on a path of sustained and inclusive development.

The most visible social expression of this progress is the emergence of a broad-based middle class. Development succeeds not when growth appears only in national statistics, but when increasing numbers of citizens achieve secure, productive, and dignified lives. In such circumstances, prosperity becomes socially rooted and widely shared.

The objective should therefore be the creation of a prosperous, equitable, and united Eritrea, the vision set out in the opening section. In such a society, citizens across all regions and communities would possess a meaningful stake in the nation’s future. Women and men alike would be able to develop and apply their capabilities. Diversity would become a source of strength rather than division. Increasing numbers of households would enjoy the security, opportunity, and upward mobility associated with a broad-based middle class.

Ultimately, national transformation is the process through which Eritrea converts its productive potential into shared prosperity, strengthens national cohesion, and expands the capabilities of its people. Eritrea’s future success will therefore be measured not by political change alone, but by its ability to create opportunities that are broadly accessible, institutions that are widely trusted, and prosperity that is nationally shared.

Equity is neither a distributive afterthought nor a constraint on development. It is one of the foundations upon which sustained development rests. Eritrea’s challenge is therefore not to choose between growth and equity, but to advance both together through institutions capable of transforming economic progress into broadly shared prosperity.

That is the essence of a democratic developmental state and the path toward a prosperous, equitable, and united Eritrea.

 

Selected References

Developmental State and Structural Transformation

Amsden, Alice H. 1989. Asia’s Next Giant: South Korea and Late Industrialization. New York: Oxford University Press.

Evans, Peter. 1995. Embedded Autonomy: States and Industrial Transformation. Princeton: Princeton University Press.

Haggard, Stephan. 2018. Developmental States. Cambridge: Cambridge University Press.

Johnson, Chalmers. 1982. MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925-1975. Stanford: Stanford University Press.

Mkandawire, Thandika. 2001. “Thinking about Developmental States in Africa.” Cambridge Journal of Economics 25 (3): 289-313.

Wade, Robert. 1990. Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization. Princeton: Princeton University Press.

Woo-Cumings, Meredith, ed. 1999. The Developmental State. Ithaca: Cornell University Press.

Human Development and Capabilities

Sen, Amartya. 1999. Development as Freedom. New York: Alfred A. Knopf.

Inequality and Inclusive Development

Stiglitz, Joseph E. 2012. The Price of Inequality: How Today’s Divided Society Endangers Our Future. New York: W. W. Norton.

Stiglitz, Joseph E. 2024. The Road to Freedom: Economics and the Good Society. New York: W. W. Norton.

Previous Articles in This Series

Negusse Micael, “Choosing Eritrea’s Development Path.” Awate.com, August 8, 2026. https://awate.com/choosing-eritreas-development-path/

Negusse Micael, “Halima’s Dilemma and Eritrea’s Democratic Developmental Horizon.” Awate.com, August 19, 2026. https://awate.com/halimas-dilemma-and-eritreas-democratic-developmental-horizon/

Negusse Micael, “Woldeab Woldemariam’s Parable of Eritrea’s Democratic Development.” Awate.com, September 2, 2026. https://awate.com/woldeab-woldemariams-parable-of-eritreas-democratic-developmental/

Negusse Micael, “From Potential to Performance: Ibrahim Sultan’s Vision and the Foundations of Eritrea’s Developmental State.” Awate.com, September 29, 2026. https://awate.com/from-potential-to-performance-ibrahim-sultans-vision-and-the-foundations-of-eritreas-developmental-state/