Macroeconomic performance under small-scale agriculture in Africa: The case Ethiopia

This paper analyzes macro economic performance of small-scale based agrarian economy in Ethiopian. The study used secondary data and focuses on four key macro economic factors namely poverty reduction, economic growth, unemployment and Inflation. In the country incidence of poverty has declined significantly between 1995/96 and 2010/11 from 46% to 29.6% respectively. After averaging the economic growth the country achieved 7.03 percent per year in the fifteen years between 1992 and 2006/7 and in the last five years (2004/5–2008/09) the double digit growth was seen. In the country unemployment rate has been declining and almost constant for one decade. Ethiopian economy faced galloping or hyperinflation type of inflation, serious type of inflation to the economy in the past time. The analysis suggests that regional, rural and urban based poverty line would better estimate the poverty situation than single poverty line. The trade-off between inflation and economic growth can be avoided if an economy is able to increase potential output by improving their supply-side performance and domestic saving.