Economic history of Ethiopia

The economy of Ethiopia remained very traditional until the later 20th century, although Ethiopia—unlike most sub-Saharan countries—had maintained trade and contacts with the outside world for centuries. Since ancient times, Ethiopian traders exchanged gold, ivory, musk, and wild animal skins for salt and luxury goods, such as silk and velvet.^[1]

By the late nineteenth century, coffee had become one of Ethiopia's more important cash crops.^[1] At that time, most trade flowed along two major trade routes, both of which terminated in the far southwest in the Kefa-Jimma region.^[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]

Despite its many riches, Ethiopia never became a great trading nation.^[1] Most Ethiopians despised traders, preferring instead to emulate the country's warriors and priests.^[1] After establishing a foothold in the country, Greek, Armenian, and Arab traders became economic intermediaries between Ethiopia and the outside world.^[1] Arabs also settled in the interior and eventually dominated all commercial activity except petty trade.^[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. A severe drought in much of the country in 1983–1985 led to a disastrous famine. 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.