Ethiopia is located in the centre-east of Africa and is bordered by six other countries.

It is the continent's tenth-largest country by area and second most populous after Nigeria.

For decades the country has suffered from periodic drought and famine.

Ehtiopia has reserves of gold, oil and gas but these have yet to be fully exploited.

Currently minerals - mostly gold - account for about 20% of exports by value.

Ethiopia has a varied landscape. The deeply incised Ethiopian Highlands in the west rise to 4500 metres. While these areas are cooler than the lowlands, soils tend to be thin and the landscape is challenging for communications and the use of machinery.

Highland plateaus and the lowlands offer better opportunities for farming, although in places they suffer from overgrazing, soil erosion and desertification. In the southeast of Ethiopia is the Ogaden Desert.

Reflecting the diversity of landscape and climate, Ethiopia has a number of different ecosystems including mountains, woodlands and wetlands.

Extensive tropical savanna grasslands fringe the highlands and deserts and semi-deserts are found on the eastern lowlands.

Biodiversity is high, with thousands of species of plants, birds and animals, including several endangered species.

Ethiopia has three distinct climatic regions. Rainfall is unreliable and can lead to prolonged periods of drought, particularly in the eastern lowlands.

Pre-1935 -
Ethiopia was not colonised by European powers during the colonial era

1935-41 -
Briefly occupied by Italy.

1941-74 -
Political unrest and periods of drought prevented development.

1974-87 - Military coup supported by the Soviet Union and Cuba imposed a communist regime. Many people were killed and lost their land during this period of extreme unrest. An estimated 15 million people were forcibly relocated. Agricultural productivity declined. In 1984-85, famine was triggered by high food prices and drought killed a million people.

1987 - 2001 -
Support from other nations, the collapse of the Soviet Union and Ethiopia's military government resulted in Ethiopia becoming the Federal Democratic Republic. The new government promoted free trade with other nations and provided farmers with cheap fertiliser to enable them to increase food production.

2001 - present -
Ethiopia has stabilised and developed through their Growth and Transformation Plan. There was also minor long-term aid from countries such as the USA. The government is relatively stable and money has been invested through the Growth and Transformation Plan to improve agricultural productivity through skills training.

Ethiopia is an LIDC and, with an HDI of just 0.485 it is one of the world's poorest countries. With a GNI of just US$850 per capita, average incomes are significantly lower than the world average of US$17,840 per capita.

Since 2005, there has been very slow growth in Ethiopia's wealth. Ethiopia is also significantly less wealthy than Sub-Saharan Africa and other LIDCs across the world.

Ethiopia has a trade deficit, in that in 2019 it exported goods to the value of US$7.6 billion but imported goods worth US$20 billion. In order to experience economic and social development, this trading deficit needs to be reduced. This will enable the country to spend more on improvements to infrastructure, education and health care.

These global links are evidence of a stable government and economy. The continued development of strong links with foreign countries will support Ethiopia's future economic development.

Ethiopia has developed strong links with foreign countries, some of whom provide international assistance in the form of foreign aid. A number of trans-national companies (TNCs) have begun to invest in Ethiopia.

TNCs are huge global organisations that operate around the world but usually have their headquarters in ACs. There are several TNCs operating in Ethiopia. Most are involved in manufacturing, investing money, materials and expertise that would not readily be available in the country.

Hilton Hotels -
Leisure and recreation services, hotels.

Siemens -
Manufacturing of telecommunications, electrical items, medical technology

General Electric -
Aviation manufacturing, delivering rail links.

Afriflora - Flower growing, the world's largest producer of fair trade roses.

TNCs can exploit the low-wage economy and avoid paying local taxes.

Higher paid management jobs are often help by foreign nationals.

Infrastructure is built to benefit the commercial activity, not to stimulate development

Incentives used to attract TNCs could have been spent supporting Ethiopian companies instead.

Ethiopia's economy is dominated by agriculture, which accounts for 68% of employment and 85% of all exports. Most people are involved in subsistence farming, growing crops in the highlands and rearing livestock in the hotter and drier lowlands.