Official government reports on growth, poverty and inequality show that Ethiopia has registered
a two-digit rate of growth in the last decade and has made immense progress in poverty
reduction. In terms of poverty, the official reports indicate that the head count ratio of poverty
(the percent of population below the poverty line) has declined from 45 percent in 1994/95 to 30
percent in 2010/11. If we base our analysis on this data, this is an impressive record. However, a
cursory look at people‘s livelihoods across the country (including Addis Ababa) reveals that
things are not as rosy as it is made out in the official reports and that many are unable to sustain
themselves, especially following the rampant inflation that began in 2005. This observation is in
line with the findings of the multidimensional poverty measure discussed later in this chapter.
Notwithstanding this, however, there is no scientific or independent basis to substantiate or
challenge the official claim. Thus, the task of an independent observer is daunting. The best
he/she can do is to critically examine the evidence in the light of empirical observations and
alternative measures of poverty, and come up with the most likely state of growth, poverty and
inequality in the country. In this chapter we will attempt to do that.
The political economy of growth, poverty and inequality is a sensitive and difficult subject in
today‘s Ethiopia, partly because of the lack of accurate information and the uncertainty
surrounding initiating dialogue on the subject. Notwithstanding this, in this work, we will
attempt to do the following. First, in the face of conflicting information and data unreliability
regarding the country‘s growth and development, it is imperative to make an educated guess of
what is the most likely state of growth in the last decade. This is done in the next section. In the
remaining sections we shall examine the nature of poverty, the implications of the reported
growth on poverty and inequality, and finally, by way of conclusion, how growth, poverty and
inequality are generally evolving and are related to the politics of the country.