Domestic resource costs—the case of Ethiopian textiles

The development and current situation of the cotton manufacturing sector of the Ethiopian textile industry are considered. The domestic resource cost method is described and used to examine the social profitability of the sector. It is concluded that the bulk of the output is socially unprofitable. Alternative courses of action are considered and the view is taken that in the long term the industry could be of real economic benefit to Ethiopia. The value of the domestic resource cost method is assessed.