Structural adjustment, its economic and social impact: The experience of Ethiopia

Ethiopia, after a long period of civil war and centralized economic management, has turned in 1991/92 into a market economy, supported by the International Monetary Funds stabilization and World Bank structural adjustment loans. The government has shown its determination to completely change the economic system and bring rapid economic growth to its people. Accordingly, radical reforms have been taken to deregulate markets and prices, liberal investment bills have passed to encourage investors, new labor codes have been introduced to bring the labor market into alignment with free market principles, public enterprises have been divested, and agriculture has been freed from all types of price and production regulations. The private sector, after twenty years of discrimination, now has started actively to participate in the economic life of the country. As a result of these policy measures, the Ethiopian economy for the first time in over a decade not only stopped shrinking but started to register positive economic growth and lay the groundwork for future market-oriented development. However, much remains to be done.