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Ethiopia 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
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