Overall, economic growth has accelerated by more than six percent a year in Ethiopia since 1992. Most of this growth has come from the non-agricultural sector. Nonetheless, growth in agricultural GDP is at three to four percent a year, still well above the population growth rate, currently estimated at 2.5 to 3.0 percent. Monetary stability, linked among other factors to a degree of fiscal prudence, has resulted in enviable price stability. For example, the impact on inflation of massive currency devaluation was negligible, inflation remaining in single digits.

While Ethiopia's macroeconomic evolution looks generally promising, experiences at the micro-level do not signal unmixed success. The Oxford and Addis Ababa researchers limited their studies to a selection of communities in rural Ethiopia where households and communities were interviewed in 1989 by the International Food Policy Research Institute as part of surveys probing the impact of the famine. From 1994, they re-interviewed the communities and households four times and further rounds are planned for the near future. A unique insight into village experiences over more than a decade is emerging.

Joint studies to date have focused on how and why poverty changes have evolved in these communities. A core finding was that, overall, poverty had declined quite strongly between 1989 and 1995 in all the communities under study. Producer prices had risen by an average 40 percent as a result of market reform and devaluation. Fertiliser and other inputs cost more but supplies and sales were up as well. Many households had taken on extra non-farm activities and numbers of people involved in petty and intermediate trading had risen.

Such consumption gains and signs of poverty reduction rest on increased returns to land and labour and on benefits of better rainfall. Much higher returns also came from living close to towns and from improvements in existing infrastructure. In short, returns to different forms of physical, human and infrastructural capital have increased considerably. These findings stood the test of several different measures of wellbeing and appear strongly to endorse the reform process. Yet the same data sources also indicate that although consumption and literacy have risen since 1992, this shift may only mark a return to pre-famine levels. Moreover:

• At least one village showed signs of worsening consumption and livestock asset figures
• Some people experienced a big decline in real consumption levels over the study period
• Income inequality appears to have worsened in several of the communities under study.