Ethiopia, Crisis of a Marxist Economy

This report analyzes and reproduces a critique of the Ethiopian economic crisis written in 1985 by Soviet State Planning Commission (GOSPLAN) advisers to the Ethiopian government. Between 1974 and 1984, grain production fell from 172 to 146 kg per year, exports declined 67 percent, and military spending rose from 49 percent to 59 percent of the national budget. In the face of this drastically deteriorated economic situation, the GOSPLAN advisers recommended a "new economic policy," i.e., a temporary return to greater economic freedom, to ease the transition from capitalism to socialism. The GOSPLAN report ignores the burden that increased military expenditures and continued military operations place on the economy; moreover, it gives no hint that Moscow might increase its economic aid. The Ethiopian leadership, meanwhile, has failed to take advantage of the Soviet recommendations to slow the collectivization of agriculture, and the private sector in trade and industry operates under severe restrictions and the threat of further nationalization. More and more of the economy is slipping underground, out of regime control.