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became famine victims during the drought of the mid-1980s, and about 1 million died. Second, the manufacturing sector stagnated as agricultural inputs declined. Many industries exhausted their capacity to increase output; as a result, they failed to meet rising demand for consumer goods. Third, the lack of
440:
The
Ethiopian government is stepping up its efforts to attract foreign investors, particularly in the textile sector. They can now import machines without customs duties, and benefit from a tax exemption for ten years, rents much lower than market prices, and almost free water and electricity. Major
386:
in EFY 1985–86 and EFY 1986–87, helped reverse the agricultural decline. The manufacturing sector also grew during this period, and GDP increased at an average annual rate of 5 percent. However, the lingering effects of the 1984-85 drought undercut these achievements and contributed to the economy's
183:
During the late 1940s and 1950s, much of the economy remained unchanged. The government focused its development efforts on expanding the bureaucratic structure and ancillary services. Most farmers cultivated small plots of land or herded cattle. Traditional and primitive farming methods provided the
167:
of
Ethiopia ended in 1941, the Italians left behind a country whose economic structure had changed little in centuries. Some improvement had taken place in communications, particularly in road building, and some limited attempts had been made to establish a few industries and to introduce commercial
335:
measures and the highly unstable political climate caused economic dislocation in sectors such as agriculture and manufacturing. Additionally, the military budget consumed a substantial portion of the nation's resources. As a result of these problems, GDP increased at an average annual rate of only
244:
of production, introduction of modern processing methods, and expansion of the economy's productive capacity to increase the country's growth rate. The third five-year plan (1968-73) sought to raise manufacturing and agro-industrial performance. Unlike its predecessors, the third plan expressed the
252:
The government lacked the administrative and technical capabilities to implement a national development plan, and staffing problems plagued the
Planning Commission (which prepared the first and second plans) and the Ministry of Planning (which prepared the third). Many project managers failed to
366:
and tabled long-term development projects. Consequently, the external accounts (as shown in the current account deficit and the debt service ratio) and the overall fiscal deficit worsened, despite international drought assistance totaling more than US$ 450 million. Close to eight million people
207:
to exploit its resources, improved living conditions, and better health, education, communications, and other services. A key element of the emperor's new economic policy was centrally-administered development plans. Between 1945 and 1957, several technical missions, including one each from the
353:
set production targets and mobilized the resources needed to improve economic conditions. Consequently, GDP grew at an average annual rate of 5.7 percent. Benefiting from good weather, agricultural production increased at an average annual rate of 3.6 percent, and manufacturing increased at an
344:
In the second phase (1978-80), the economy began to recover as the government consolidated power and implemented institutional reforms. The government's new
Development Through Cooperation campaign (commonly referred to as zemecha) also contributed to the economy's improvement. More important,
268:
The second five-year plan and third five-year plan anticipated that the economy would grow at an annual rate of 4.3 percent and 6.0 percent, respectively. Officials also expected agriculture, manufacturing, and transportation and communications to grow at respective rates of 2.5, 27.3, and 6.7
235:
The first five-year plan (1957-61) sought to develop infrastructure to link isolated regions, particularly in transportation, construction, and communications. Another goal was an indigenous cadre of skilled and semiskilled personnel to work in processing industries to help reduce
Ethiopia's
357:
In the third phase (1980-85), the economy experienced a setback. Except for
Ethiopian fiscal year (EFY) 1982–83, the growth of GDP declined. Manufacturing took a downturn as well, and agriculture reached a crisis stage. Four factors accounted for these developments. First, the 1984-85
240:. The plan also proposed to accelerate agricultural development by promoting commercial agricultural ventures. The second five-year plan (1962-67) began a 20-year program to change Ethiopia's predominantly agricultural economy to an agro-industrial one. The plan's objectives included
272:
However, according to data from the
Ethiopian government's Central Statistical Authority, during the 1960–61 to 1973–74 period the economy achieved sustained economic growth. Between 1960 and 1970, for example, Ethiopia enjoyed an annual 4.4 percent average growth rate in per capita
256:
During the first five-year plan, the gross national product (GNP) increased at a 3.2 percent annual rate as opposed to the projected figure of 3.7 percent, and growth in economic sectors such as agriculture, manufacturing, and mining failed to meet the plan's targets.
269:
percent annually during the second five-year plan and at respective rates of 2.9, 14.9, and 10.9 percent during the third five-year Plan. The
Planning Commission never assessed the performance of these two plans, largely because of a shortage of qualified personnel.
316:, the government attempted to restrict imports and substitute locally produced industrial goods to improve the balance of trade. However the unfavorable trade balance continued. As a result, foreign grants and loans financed much of the balance of payments deficit.
340:
jumped, experiencing a 16.5 percent average annual increase. The basic economy during this time was dependent on the agriculture industry. Upwards of eighty percent of the population was directly or indirectly dependent upon agriculture for their livelihood.
299:
By the early 1970s, Ethiopia's economy not only had started to grow but also had begun to diversify into areas such as manufacturing and services. However, these changes failed to improve the lives of most
Ethiopians. About four-fifths of the population were
277:(GDP). The manufacturing sector's growth rate more than doubled from 1.9 percent in 1960–61 to 4.4 percent in 1973–74, and the growth rate for the wholesale, retail trade, transportation, and communications sectors increased from 9.3 percent to 15.6 percent.
249:, about 25 percent above the planned 674 million birr figure; total expenditure for the second five-year plan was 13 percent higher than the planned 1,694 million birr figure. The allocation for the third five-year plan was 3,115 million birr.
219:
In 1954–55 the government created the
National Economic Council to coordinate the state's development plans. This agency, which was a policy-making body chaired by the emperor, devoted its attention to improving agricultural and industrial
216:, prepared a series of development plans. However, these plans failed to achieve any meaningful results, largely because basic statistical data were scarce and the government's administrative and technical capabilities were minimal.
354:
average annual rate of 18.9 percent, as many manufacturers whose had shut down, particularly in Eritrea, reopened. The current account deficit and the overall fiscal deficit remained below 5 percent of GDP during this period.
461:
allow them to export duty-free. There is huge economic reforms, starting from 2018, has been undertaken after the leadership of EPDRF-TPLF foll down and replaced by "Prosperity Party" leadership of Abiy Ahimed Ali (PHD).
253:
achieve plan objectives because they neglected to identify the resources (personnel, equipment, and funds) and to establish the organizational structures necessary to facilitate large-scale economic development.
308:. On a broader level, from 1953 to 1974 the balance of trade registered annual deficits. The only exception was 1973, when a combination of unusually large receipts from the export of oilseeds and
426:(banks, mines, etc.) without investing in structural or strategic sectors (industrial production, infrastructure, etc.) and in no way promote economic development or represent a source of
945:
331:
Internal political upheaval, armed conflict, and radical institutional reform marked the 1974-78 period of the revolution. There was little economic growth; instead, the government's
136:
traders became economic intermediaries between Ethiopia and the outside world. Arabs also settled in the interior and eventually dominated all commercial activity except petty trade.
387:
overall stagnation. During the 1985-90 period, the current account deficit and the overall fiscal deficit worsened to annual rates of 10.6 and 13.5 percent, respectively, and the
245:
government's willingness to expand educational opportunities and to improve peasant agriculture. Total investment for the first five-year plan reached 839.6 million
147:, increased spending on the military and an unstable political climate did little to improve matters. A severe drought in much of the country in 1983-85 led to
950:
379:
establishment created a major burden on the economy. Defense expenditures during this time absorbed 40 to 50 percent of the government's current expenditures.
261:
increased at a 3.5 percent annual rate during the first plan, whereas imports grew at a rate of 6.4 percent per annum, thus failing to correct the negative
192:
and followed a life of seasonal movement. The agricultural sector grew slightly, and the industrial sector represented a small part of the total economy.
172:, which Italy had occupied since 1890. Only a small proportion of the population participated in the money economy, so trade at the time consisted of
180:
was limited, economic units were largely self-sufficient, foreign trade was negligible, and the market for manufactured goods was extremely small.
280:
Relative to its neighbors, Ethiopia's economic performance was mixed. Ethiopia's 4.4 percent average per capita GDP growth rate was higher than
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and an unusually small increase in imports resulted in a favorable balance of payments of 454 million birr. With the country registering
930:
139:
Efforts to modernize and develop the economy in the final years of the monarchic period had relatively little success, and after the
1005:
768:
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despised traders, preferring instead to emulate the country's warriors and priests. After establishing a foothold in the country,
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38:—had maintained trade and contacts with the outside world for centuries. Since ancient times, Ethiopian traders exchanged
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151:. Only in the 1990s did the economy begin to improve, although in 2021 disputes, including open warfare, between the
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77:. At that time, most trade flowed along two major trade routes, both of which terminated in the far southwest in the
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and restructuring of the Ethiopian economy. After the revolution, the country's economy went through four phases.
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for all Ethiopians. The National Economic Council helped to prepare Ethiopia's first and second five-year plans.
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935:
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who lived in poverty because most of their meager production went to pay taxes, rents, debt payments, and
274:
853:
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security conditions improved as internal and external threats subsided. In the aftermath of the 1977-78
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and Huajian. These companies also benefit from a cheap labor force, with a monthly salary of around 35
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of government regulation. While the process is still ongoing, the reforms have attracted much-needed
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In the fourth period (1985-90), the economy continued to stagnate, even though an improvement in the
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0.4 percent. Moreover, the current account deficit and the overall fiscal deficit widened, and the
200:
27:
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229:
35:
422:, a number that has more than doubled since 2007. Their fortunes were mainly made in niches of
774:
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Since 1991, the Ethiopian government has embarked on a program of economic reform, including
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affected almost all regions of the country, so the government committed scarce resources to
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813:
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Wubneh, Mulatu (1993). "The Economy". In Ofcansky, Thomas P.; Berry, LaVerle (eds.).
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achieved a 5.6 percent growth rate during the same 1960–61 to 1972–73 period.
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121:
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standard of living. In addition, many nomadic peoples in drier areas raised
129:
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Despite its many riches, Ethiopia never became a great trading nation. Most
74:
376:
31:
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and declining investment reversed the relatively high rate of growth in
757:
Seid, Yared; Taffesse, Alemayehu S.; Ali, Seid Nuru (8 November 2016).
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and the national government were still causing serious disruption.
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This article incorporates text from this source, which is in the
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remained very traditional until the later 20th century, although
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199:(reigned 1930–74) had renewed calls for a transition from a
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brands have established themselves in the country, such as
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GDP grew at an estimated 6 percent annual rate, and
1189:
1164:
883:
814:"Rencontre avec les pionniers de l'anticapitalisme"
203:to an agro-industrial economy. Ethiopia needed an
349:and the decline in rebel activity in Eritrea,
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8:
734:"Political and Economic History of Ethiopia"
85:region. From there, one route went north to
73:had become one of Ethiopia's more important
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854:
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760:Ethiopia—an agrarian economy in transition
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375:of 1978–80. Finally, Ethiopia's large
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324:The 1974 revolution resulted in the
831:GĂ©rand, Christelle (1 April 2019).
672:(4th ed.). Washington, D.C.:
14:
812:Piot, Olivier (1 November 2017).
212:of the United Nations (FAO), and
210:Food and Agriculture Organization
1176:Sahrawi Arab Democratic Republic
946:Democratic Republic of the Congo
699:
69:By the late nineteenth century,
763:. Brookings Institution Press.
1:
265:that had existed since 1951.
22:Development of GDP per capita
1275:Economic history of Ethiopia
418:In 2015, Ethiopia had 2,700
228:and diseases, and improving
195:By the early 1950s, Emperor
877:Economic history of Africa
1291:
718:: CS1 maint: postscript (
97:, and the other along the
58:and luxury goods, such as
674:Federal Research Division
669:Ethiopia: a country study
457:between Ethiopia and the
413:foreign direct investment
288:1 percent rate. However,
168:farming, particularly in
931:Central African Republic
275:gross domestic product
23:
1091:SĂŁo TomĂ© and PrĂncipe
951:Republic of the Congo
837:Le Monde diplomatique
818:Le Monde diplomatique
36:sub-Saharan countries
21:
833:"Going for textiles"
680:. pp. 146–150.
391:continued to climb.
284:1.3 percent rate or
141:Ethiopian Revolution
1166:States with limited
678:Library of Congress
472:History of Ethiopia
302:subsistence farmers
208:United States, the
201:subsistence economy
149:a disastrous famine
28:Economy of Ethiopia
389:debt service ratio
338:retail price index
184:population with a
24:
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1193:other territories
966:Equatorial Guinea
714:cite encyclopedia
405:state enterprises
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1253:(United Kingdom)
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1245:Ascension Island
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455:trade agreements
369:foreign exchange
263:balance of trade
230:living standards
197:Haile Selassie I
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314:trade deficits
236:dependence on
224:, eradicating
205:infrastructure
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34:—unlike most
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1241:Saint Helena
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1116:South Africa
1106:Sierra Leone
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911:Burkina Faso
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741:. Retrieved
738:www.sjsu.edu
737:
728:
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420:millionaires
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395:1991–present
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222:productivity
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52:animal skins
25:
15:
1168:recognition
1121:South Sudan
1011:Ivory Coast
795:|work=
428:competition
351:Addis Ababa
186:subsistence
163:When their
105:then on to
99:Awash River
50:, and wild
1223:(Portugal)
1181:Somaliland
1101:Seychelles
1066:Mozambique
1051:Mauritania
1036:Madagascar
991:The Gambia
926:Cape Verde
743:2021-10-10
481:References
347:Ogaden War
226:illiteracy
214:Yugoslavia
178:Wage labor
165:occupation
122:Ethiopians
101:valley to
75:cash crops
1056:Mauritius
797:ignored (
787:cite book
779:961309230
453:Finally,
443:Decathlon
320:1974–1991
286:Somalia's
190:livestock
159:1941–1974
143:of 1974,
1269:Category
1247: /
1243: /
1236:(France)
1230: /
1208: /
1204: /
1156:Zimbabwe
1131:Tanzania
981:Ethiopia
976:Eswatini
956:Djibouti
921:Cameroon
906:Botswana
696:25869403
466:See also
377:military
130:Armenian
32:Ethiopia
1232:RĂ©union
1228:Mayotte
1219:Madeira
1214:(Spain)
1210:Melilla
1141:Tunisia
1111:Somalia
1096:Senegal
1081:Nigeria
1071:Namibia
1061:Morocco
1026:Liberia
1021:Lesotho
971:Eritrea
941:Comoros
916:Burundi
891:Algeria
447:H&M
432:Western
384:weather
360:drought
290:Kenya's
282:Sudan's
259:Exports
238:imports
170:Eritrea
115:Red Sea
113:on the
107:Berbera
87:Mitsiwa
1251:
1234:
1221:
1151:Zambia
1146:Uganda
1086:Rwanda
1041:Malawi
1001:Guinea
896:Angola
777:
767:
694:
684:
451:euros.
310:pulses
306:bribes
294:Uganda
174:barter
132:, and
91:Gonder
89:, via
71:coffee
64:velvet
1206:Ceuta
1126:Sudan
1076:Niger
1031:Libya
1016:Kenya
996:Ghana
986:Gabon
961:Egypt
901:Benin
126:Greek
111:Zeila
103:Harer
83:Jimma
44:ivory
1136:Togo
1046:Mali
936:Chad
799:help
775:OCLC
765:ISBN
720:link
692:OCLC
682:ISBN
430:for
407:and
247:birr
134:Arab
95:Adwa
93:and
79:Kefa
62:and
60:silk
56:salt
54:for
48:musk
40:gold
26:The
403:of
109:or
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785:{{
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716:}}
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81:-
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