|The current government has embarked on a program of economic reform,
including privatization of state enterprises and rationalization of
government regulation. While the process is still ongoing, the reforms
have begun to attract much-needed foreign investment.
The Ethiopian economy is based on agriculture, which contributes 45% to GNP and more than 80% of exports and employs 85% of the population. The major agricultural export crop is coffee, providing 65%-75% of Ethiopia's foreign exchange earnings. Other traditional major agricultural exports are hides and skins, pulses, oilseeds, and the traditional "khat," a leafy shrub which has psychotropic qualities when chewed.
Ethiopia's agriculture is plagued by periodic drought, soil degradation caused by overgrazing, deforestation, high population density, and poor infrastructure, making it difficult and expensive to get goods to market. Yet it is the country's most promising resource. A potential exists for self-sufficiency in grains and for export development in livestock, grains, vegetables, and fruits.
Gold, marble, limestone, and small amounts of tantalum are mined in Ethiopia. Other resources with potential for commercial development include large potash deposits, natural gas, iron ore, and possibly oil and geothermal energy. Although Ethiopia has good hydroelectric resources ,which power most of its manufacturing sector, it is totally dependent on imports for its oil. A landlocked country, Ethiopia uses the seaports of Assab and Massawa in Eritrea. Ethiopia also uses the port of Djibouti, connected to Addis Ababa by rail, for international trade. Of the 23,812 kilometers of Ethiopia's all-weather roads, 15% are asphalt. Mountainous terrain and the lack of good roads and sufficient vehicles make land transportation difficult. However, the government-owned airline is excellent. Ethiopian Airlines serves 38 domestic airfields and has 42 international destinations.
Dependent on a few vulnerable crops for its foreign exchange earnings and reliant on imported oil, Ethiopia lacks sufficient foreign exchange. The financially conservative government has taken measures to solve this problem, including stringent import controls and sharply reduced subsidies on retail gasoline prices. Nevertheless, the largely subsistence economy is incapable of supporting high military expenditures, drought relief, an ambitious development plan, and indispensable imports such as oil and, therefore, must depend on foreign assistance.
GDP: purchasing power
parity - $39.2 billion (2000 est.)
SOURCES: The World Factbook, U.S. Department of State
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