This chapter focuses on the Ethiopian government's successful use of debt-based financial statecraft. It examines Ethiopia's shift from heavy reliance on traditional donor aid to borrowing from Chinese lenders and issuing a debut international bond. Using interviews with government and donor officials, it highlights how this diversification of external finance allowed the Ethiopian government to obtain more favorable terms in aid agreements, including lenience from donors on governance issues, flexibility on economic monitoring, and donor support for the government's state-led approach to development. When Ethiopia's financing options later narrowed, the government's bargaining leverage with donors declined, further corroborating the role of alternative finance in aid negotiations. The chapter underscores the importance of donors' perceptions of Ethiopia's strategic value and donors' trust in the government for their willingness to accommodate the Ethiopian government's preferences.

By the mid-2010s, distributive crisis – manifest in shortages of land and employment that particularly affected young adults – undermined the EPRDF’s political control. Despite engineering landslide electoral victories in 2010 and 2015, mass anti-government protests exploded in 2014 and then again from late 2015. By early 2018, the EPRDF conceded a leadership change that ultimately led to the abandonment of its project of state-led development and the collapse of the ruling coalition. This chapter provides a detailed account of these events, highlighting three main causes. First, the distributive crisis meant that many young adults had escaped the EPRDF’s control and were deeply disenchanted with unfulfilled promises of developmental progress. Second, the EPRDF’s response differed markedly from past crises due to divisions within the ruling elite. Rather than a collective threat requiring a coherent response, subordinate EPRDF factions sought to use the protests as political leverage within the ruling coalition. Third, these mass and elite political dynamics were refracted through the prism of ethnic federalism; mass unrest and elite contestation manifest along ethnic lines.

This final chapter reflects on the implications of the rise and fall of the EPRDF. The discussion considers, first, the EPRDF’s legacy for Ethiopian politics and development, and, second, the relevance of Ethiopia for debates about late-late development and authoritarian durability. While the beginning of the twenty-first century has seen resurgent interest in state-led development and industrial policy, there has been insufficient attention to the political economy drivers that might realise structural transformation in a context of late-late development. For many East Asian late developers, authoritarian leaders pursued development as a means of maintaining political order. While somewhat comparable processes underpinned rapid growth in Ethiopia, the EPRDF’s failings raise doubts regarding the potential for authoritarian state-led development in Africa. The realisation of hopes for structural transformation in Africa will require new political configurations that provide rulers with the incentives to pursue political survival through economic transformation within the constraints of late-late development.

Chapter 4 focuses on the political dynamics that shaped the EPRDF’s development strategy from 1991 to the death of Prime Minister Meles Zenawi in 2012. Despite military dominance, the EPRDF was vulnerable due to its lack of a political base outside Tigray. The new government sought to consolidate control of the ethnically diverse peasantry through a dual strategy: establishing federalism that provided for ethnic self-determination; and a broad-based development strategy to secure compliance through mass distribution. From early on, however, the government recognised that the main form of distribution – land access – would be undermined by population growth, necessitating industrialisation and mass employment creation to maintain mass acquiescence. During the early 2000s, the EPRDF leadership experienced a series of crises that resulted in increased elite cohesion and a shared sense of the threat facing the ruling elite. The result was Ethiopia’s ‘developmental state’ model, comprising infrastructure development, industrialisation and agricultural commercialisation to deliver the economic transformation required to meet the mass distributive challenge facing the regime.