Abstract

Inequality increased in Ethiopia from 2004 to 2015: The national income share of the lowest quintile of the population declined 40 % during that period. The national income share of the lowest 80 % has dropped 35 % during the same period, so that in 2015 it was lower than it was under the Communist-led Derg in 1981. While GDP per capita has increased in the country, the majority of the population is receiving a smaller percentage of national income than in the 1990s, as the distance between them and the wealthy widens. Reciprocity, that is, cooperation among social classes, has declined since 2004. This study explains the anomaly where GDP per capita can rise but the share in national income of the majority of the population declines. It applies Aristotle’s critique of political economy and proposes a new metric for growth as a function of Aristotle`s measure of reciprocity and GDP per capita.