Country Listing

Ethiopia Table of Contents


Economic Prospects

Under the imperial regime, economic progress was sluggish. The country's agricultural and industrial performance was poor. Efforts by the emperor to bring Ethiopia into the twentieth century enjoyed some success in limited areas, such as the emergence of Ethiopian Airlines; however, on the whole, imperial Ethiopia's economic policies must be judged a failure. As a result, many Ethiopians supported the 1974 revolution in hopes that it would improve their standard of living.

Between 1974 and 1975, Ethiopia's Marxist government carried out a wide range of political, economic, and social reforms. Unfortunately, these reforms promised more than they delivered. Gradually, the country's economy deteriorated. By 1990-91 Ethiopia's economy was in a steep decline, from which recovery will be difficult. During the last year of the military government, GDP declined by 5 percent in real terms, and inflation soared. Defense expenditures accounted for 40 to 60 percent of the national budget. Merchandise exports fell to their lowest level since 1974, and a collapse in international coffee prices (during the 1979-89 period, coffee accounted for an average of 55 percent of total exports) reduced foreign-exchange reserves to an all-time low. More important, insurgencies had spread to new areas of central and northern Ethiopia; recurring cycles of drought and famine again threatened millions of Ethiopians; and ill-conceived Marxist economic policies further eroded the country's economic performance. As a result of these and numerous other problems, the World Bank classified Ethiopia as the world's poorest country. Mengistu's early 1990 adoption of a new economic policy failed to reinvigorate Ethiopia's ailing economy. Without massive and genuine political, economic, and social reforms, it appeared unlikely that Ethiopia could harness its resources and improve the lives of its citizens anytime soon.

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Much of the literature about Ethiopia's economy examines land tenure and land reform. Some of the more useful works about the imperial era include John Markakis's Ethiopia: Anatomy of a Traditional Polity and John M. Cohen and Dov Weintraub's Land and Peasants in Imperial Ethiopia. A considerable amount of literature deals with land reform in the post-1974 period. Essential studies include Dessalegn Rahmato's Agrarian Reform in Ethiopia, Haile Yesus Abegaz's The Organization of State Farms in Ethiopia after the Land Reform of 1975, Keith Griffin and Roger Hay's "Problems of Agricultural Development in Socialist Ethiopia," and Ajit Kumar Ghose's "Transforming Feudal Agriculture." Kidane Mengisteab's Ethiopia: Failure of Land Reform and Agricultural Crisis analyzes the relationship between inadequate land reform policies and recurring famines during the imperial and revolutionary periods. Marina Ottaway's The Political Economy of Ethiopia includes chapters that offer a critical analysis of Ethiopia's economic crisis.

For general statistical materials, the best sources are the annual Ethiopia: Statistical Abstract published by the Ethiopian government's Central Statistical Authority and the Annual Report of the National Bank of Ethiopia. The most upto -date data are available in the bank's Quarterly Bulletin. The Country Reports published quarterly and annually by the Economist Intelligence Unit also contain a great deal of useful economic information. (For further information and complete citations, see Bibliography.)

Data as of 1991