Ethiopia has successfully implemented policies to reduce inflation and rebuild external reserves. Fiscal policy aims to continue the strong focus on physical and social infrastructure investment while raising the revenue effort. The recent reframing of monetary policy to adopt a reserve money nominal anchor holds out the prospect for the end of financial repression. While the External Shocks Facility-supported program has achieved its objectives of macroeconomic stabilization and a rebuilding of external reserves, much remains to be done to sustain and accelerate growth.

This Selected Issues paper on The Federal Democratic Republic of Ethiopia highlights that accelerating private sector development is the key to increasing and sustaining growth, and providing employment opportunities to raise incomes. Private sector development remains in its infancy, reflecting the slow transition to a market economy, and the contribution of industry to GDP has not changed significantly. The World Bank has identified some key areas to improve the investment climate, which include deeper financial sector reform and acceleration of the privatization program.

This Selected Issues paper investigates the macroeconomic impact of existing gender gaps in Ethiopia and discusses the authorities’ policies in the areas of gender equality and women’s rights, with a focus on women’s economic engagement. Ethiopia has shown a firm political commitment to the advancement of gender equality and women’s rights; however significant challenges around women’s economic participation remain. Whilst most people work in Ethiopia, women face many barriers to formal labor force participation, have lower levels of education than men—particularly at secondary and tertiary levels—and have significant wage gaps compared to men. The findings suggest that, eliminating gender gaps in both educational attainment and the rate of formal employment could increase output in Ethiopia over time by over 24 percent. Improved institutional capacity would lead to better integration of gender issues into the planning and implementation of government policies. Ethiopia has already embedded gender units within the structure of many of its ministries.

Ethiopia has had four constitutions throughout its history: the 1931 version, the 1955 version, the 1987 version, and the 1995 version; which is currently in effect. Until the adoption of the first of these constitutions, the concepts of Ethiopian government had been codified in the Kebra Nagast (which presented the concept that the legitimacy of the Emperor of Ethiopia was based on its asserted descent from king Solomon of ancient Israel), and the Fetha Nagast (a legal code used in Ethiopia at least as early as 1450 to define the rights and responsibilities of the monarch and subjects, as defined by the Ethiopian Orthodox Tewahedo Church).

The first book to be published on the Ethiopian constitution which was established in 1994, it deals with the intricacies of federalism and the unfolding of democracy in a country that since pre-Christian times was run as a feudal state.