Economic history of Ethiopia
Since ancient times, Ethiopian traders exchanged gold, ivory, musk, and wild animal skins for salt and luxury goods, such as silk and velvet.
[1] From there, one route went north to Mitsiwa, via Gonder and Adwa, and the other along the Awash River valley to Harer then on to Berbera or Zeila on the Red Sea.
[1] After establishing a foothold in the country, Greek, Armenian, and Arab traders became economic intermediaries between Ethiopia and the outside world.
[1] Efforts to modernize and develop the economy in the final years of the monarchic period had relatively little success, and after the Ethiopian Revolution of 1974, nationalization, increased spending on the military and an unstable political climate did little to improve matters.
Only in the 1990s did the economy begin to improve, although in 2021 disputes, including open warfare, between the Tigray Region and the national government were still causing serious disruption.
[1] 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 farming, particularly in Eritrea, which Italy had occupied since 1890.
[1] Wage labor was limited, economic units were largely self-sufficient, foreign trade was negligible, and the market for manufactured goods was extremely small.
[1] Ethiopia needed an infrastructure to exploit its resources, improved living conditions, and better health, education, communications, and other services.
[1] 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.
[1] Another goal was an indigenous cadre of skilled and semiskilled personnel to work in processing industries to help reduce Ethiopia's dependence on imports.
[1] Unlike its predecessors, the third plan expressed the government's willingness to expand educational opportunities and to improve peasant agriculture.
[1] Many project managers failed to 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.
[1] 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.
[1] Between 1960 and 1970, for example, Ethiopia enjoyed an annual 4.4 percent average growth rate in per capita gross domestic product (GDP).
[1] About four-fifths of the population were subsistence farmers who lived in poverty because most of their meager production went to pay taxes, rents, debt payments, and bribes.
[1] Internal political upheaval, armed conflict, and radical institutional reform marked the 1974-78 period of the revolution.
[1] In the aftermath of the 1977-78 Ogaden War and the decline in rebel activity in Eritrea, Addis Ababa set production targets and mobilized the resources needed to improve economic conditions.
[1] First, the 1984-85 drought affected almost all regions of the country,[1] so the government committed scarce resources to famine relief and tabled long-term development projects.
[1] Many industries exhausted their capacity to increase output;[clarification needed] as a result, they failed to meet rising demand for consumer goods.
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.
