Ethiopia: Economy

Posted: February 14, 2008 in Uncategorized


Salient Features: Socialist oriented after 1974 revolution, with strong state controls. Thereafter, large part of economy transferred to public sector, including most modern industry and large-scale commercial agriculture, all agricultural land and urban rental property, and all financial institutions; some private enterprise and capital participation permitted in certain sectors. Since mid-1991, a decentralized, market-oriented economy emphasizing individual initiative, designed to reverse a decade of economic decline. In 1993 gradual privatization of business, industry, banking, agriculture, trade, and commerce under way.

Gross Domestic Product (GDP): US$6 billion in 1990; per capita GDP about US$120. Economy grew during late 1970s but declined in early 1980s and stagnated thereafter. GDP in Ethiopian fiscal year (EFY) 1990/91 fell by 5 to 6 percent in real terms, after a 1 percent decline in EFY 1989/90. Agriculture registered modest gains after 1989.

Agriculture and Livestock: Accounted for approximately 40 percent of gross domestic product (GDP), 80 percent of exports, and 80 percent of labor force in 1991; other activities dependent on marketing, processing, and exporting of agricultural products. Production overwhelmingly of subsistence nature with large part of commodity exports provided by small agricultural monetized sector. Principal crops coffee, pulses, oilseeds, cereals, potatoes, sugarcane, and vegetables. Livestock population believed largest in Africa. Livestock alone accounted for about 15 percent of GDP in 1987.

Industry: Manufacturing severely affected by economic dislocation following revolution. Growth of sector low after 1975. Primary subsectors cement, textiles, food processing, and oil refining. In 1993 smaller enterprises being privatized; larger ones still under state control. Most industry functioning well below capacity.

Energy Sources: Hydroelectric power most important developed and potential source of energy. Domestic mineral fuel resources in 1991 included low-grade lignite and traces of petroleum and natural gas. Potentially important geothermal power exists in Great Rift Valley.

Foreign Trade: Little foreign trade by international standards. Exports almost entirely agricultural commodities; coffee largest foreign exchange earner. Value of imports regularly greater than export receipts. Wide range of trading partners, but most important in 1992 included United States, Germany, Britain, and Japan.

Currency: Birr (pl., birr; no symbol). Prior to October 1, 1992, US$1 equaled 2.07 birr. After devaluation on that date US$1 equaled 4.94 birr. Significant parallel currency market existed before devaluation.


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