The Ethiopian government has boldly set very rapid and sustainable growth and its equitable
distribution as its prime development objective to end poverty in the foreseeable future. For this
reason, promoting agricultural and rural development has been purported by the government as its top
development agenda since it took power some 19 years back. Yet the extent to which the government
realizes this objective remains in doubt. This paper attempts to analyze the dynamic relationships
among poverty, inequality and growth. While many of the available studies use aggregate crosscountry
data sets, this study, however, uses household panel data-set. The decomposition result
indicates that the observed growth was neither rapid nor sustainable. Poverty and inequality have not
also declined considerably except between 1995 and 1997. The study also systematically generated 90
observations of indices from the five rounds to estimate Fixed Effect (FE) regression model. The
estimated growth and inequality elasticities of poverty were found equal to 3.32 and -3.68, respectively.
What this means is that poverty could still remain high if the country fails to achieve rapid and
sustainable growth, on the one hand, and simultaneously reduce inequality, on the other.