Ethiopia’s Transition from a Traditional to a Developing Economy, 1890s–1960s

At the end of the nineteenth century, Ethiopia had a traditional economy dependent on ox-plough agriculture and crafts. Goods and services were exchanged through the barter system. This changed from the 1890s onwards with modern innovations such as the railway, telephone and telegraph, banking, and a national currency. In the first four decades of the twentieth century, import/export trade expanded, elementary education spread, new towns emerged, and manufacturing enterprises were born. Italian occupation of the country (1936–41) helped push forward the monetization of the economy. In the three decades after liberation (1940s–1960s), advances were made in the development of the services, manufacturing, and financial sectors. Basic education was expanded, and the government adopted a series of development plans to guide the process of economic and social development. The principle of disciplined state planning to transform the economy has continued under the EPRDF although the task remains incomplete.