Post 1991 Ethiopia and Saudi Arabia Economic Relations: Challenges and Opportuniteis of Trade and Agricultural Investment
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Date
2011-05
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Addis Ababa University
Abstract
Ethiopian has had long-standing bilateral relations with the Arabian Peninsula dating back to
ancient Axumite kingdom. The relations were manifested in terms of religion, economic, and
political aspects. In all of these contacts, the interaction has had both challenges and
opportunities. For instance, starting from 1932 (after the formation of Saudi Arabia, taking
much of Arabian Peninsula) until 1991, there were no active relations between Ethiopia and
Saudi Arabia. However, 1991 was the turning point in the relation between the two countries.
In these years, economic interactions took more importance though political and religious
contacts still have significance.
This research thesis looks into post-1991 Ethiopia and Saudi Arabian economic relations:
taking agricultural investment and trade as the main focus. It aims to understand the
challenges and opportunities that these agricultural investment and trade bring to Ethiopia
when the country conducts its economic relation with Saudi Arabia. The study argues that
Saudi Arabia has strategic, religious and economic interest towards Ethiopia. But due to
political development in Ethiopia after 1991, economical interests prevailed over other
interests.
In view of this, the objective of this thesis is to provide empirical evidences regarding the
advantages and disadvantages of agricultural investment and the types of export and import
items that Ethiopia and Saudi Arabia are trading with each other. The thesis indicates that
trade relations and Saudi investment in agricultural sector are increasing tremendously in
recent years. To study these issues, the thesis has used qualitative research methodology. In
chapter two and three, available literatures were reviewed to discus about historical relations
of the two countries. Concerning advantages and disadvantages of the agricultural investment,
unstructured interview were conducted with workers of Saudi Star Agricultural Company,
residents in Gambella, and pertinent officials in agricultural areas.
This study tries to answer research questions: Why has Saudis economic interest increased
after 1991 in Ethiopia? What are different factors for trade imbalance which is usually in favor
of Saudi Arabia? What are the roles of Saudi agricultural investment for the food security in
Ethiopia? The findings from data analysis showed that the economic relationships between the
two countries are in favor of Saudi Arabia in agricultural investment and trade. With regard to
agricultural investment, Saudi investments in this sector do not solve food insecurity in
Ethiopia; it is merely for export to the Saudi market. Also, available data show that Ethiopia imports more commodities from Saudi Arabia than it exports
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International Relation