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7 The Economic Crisis in Ethiopia: K. Griffin, World Hunger and The World Economy © Keith Griffin 1987

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5 views2 pages

7 The Economic Crisis in Ethiopia: K. Griffin, World Hunger and The World Economy © Keith Griffin 1987

goach

Uploaded by

Regie Asis
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© © All Rights Reserved
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7 The Economic Crisis in

Ethiopia
On the eve of the revolution of 1974 the economy of Ethiopia was
perhaps the most backward in the world. Life was short; indeed a life
expectancy at birth of 37.5 years for males and 40.6 for females was
the lowest in the world. This short life expectancy was accompanied
by a high infant mortality rate ( 178 per 1000 live births) and a high
maternal death rate (20 per 1000 births). Ethiopia had the least
favourable ratio of doctors to population (one physician per 75 320
people) and the lowest rate of calorie consumption per capita ( 1754)
of any country on earth.
About 85 per cent of the population lived in rural areas, yet 90 per
cent of the rural people lived in shelters which offered minimal
protection against the weather, were shared with domestic animals
and posed many safety and health hazards, especially for children. In
the country as a whole, only 6 per cent of the population had access
to safe water and most people had to work and live without the
assistance of mechanical or electrical power. (Energy consumption
per capita was only about 20 kg of coal equivalent.) The economy
had to rely largely on man- and woman-power, supplemented by
animal-power, and in consequence the productivity of labour was
very low.
The population as a whole was both ignorant and extremely poor.
Prior to the revolution, about 52 per cent of the urban population
were illiterate and in rural areas the rate of illiteracy was 91.5 per
cent. Only one or two countries suffered from a comparable degree
of lack of education. Similarly, income per head, at roughly US$115,
was about as low as could be found anywhere. 1
This is the inheritance of underdevelopment. It would, of course,
be unrealistic to expect that the poverty of centuries could be eradi-
cated in a few years, but it would be reasonable to hope that a decade
after the revolution some progress would have been made in increas-
ing the appallingly low standard of living of the mass of the popula-
tion. Alas, it was not to be.
The economy of Ethiopia has been in crisis for a long time. In
particular the value of agricultural output per head has been falling at
least since 1960, and given that the overwhelming majority of the
183
K. Griffin, World Hunger and the World Economy
© Keith Griffin 1987
184 World Hunger and the World Economy

people live in rural areas, this implies that living standards of most
people have been declining for a quarter of a century. The decline
has not been steady: living standards have tended to fluctuate with
the harvests, which in turn are strongly influenced by the timing' and
amount of rainfall, but the trend has been clearly downwards. As a
result of the negative trend the likelihood of a famine increases with
each downswing of the cycle, and each famine now tends to be worse
than its immediate predecessor. Thus the current famines are worse
than those of 1972-4,2 which resulted in the overthrow of Emperor
Haile Selassie, 3 and those in turn were worse than the famine of
1965-6.
An alarming feature of Ethiopia's economy is that the rate of
deterioration has accelerated since 1970 and the economy today
teeters on the verge of collapse. For example, between 1960 and 1970
the value of agricultural output per head declined by 0.2 per cent a
year on average, but between 1970 and 1982 the rate of decline
accelerated to 1.1 per cent a year. Similarly, investment per head
actually increased by 3.3 per cent a year during the first period and
then declined by 1.3 per cent a year during the second (see Table
7.1). Although the dividing line between the two periods does not
coincide with the date of the downfall of the Emperor, it seems clear
that economic performance under the revolutionary regime has been
even worse than under the ancien regime.
The most obvious immediate cause of the acute suffering currently
being endured by the people of Ethiopia is the drought. The rains
were particularly bad in 1984/5 and the 1984 harvests are estimated to
have been between 25 and 40 per cent below normal. 4 A second
cause is the depressed world economy and the poor trading environ-
ment that now confronts the country. This is reflected in a plummet-
ing fall in the country's terms of trade, a decline in exports per head,
a contraction of the country's capacity to import and a pronounced
decline in imports per head, as shown in Table 7 .1.
Third, there are the civil wars. The separatist movement in Eritrea
goes back to 1961, but the violence of the conflict intensified greatly
after 1975 when the Dergue (the Provisional Military Administrative
Council) decided not to compromise but to seek a military solution to
the problem. 5 In addition, there have been rebellions by several
other non-Amhara groups, including the Somalis in the south, the
Tigreans in the north and the Oromos, largely from Wellega in the
west. In each case the Dergue has chosen to respond to these
nationalist movements by using force rather than persuasion and

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