Ethiopia vs. Djibouti

geologically active Great Rift Valley susceptible to earthquakes, volcanic eruptions; frequent droughts

volcanism: volcanic activity in the Great Rift Valley; Erta Ale (613 m), which has caused frequent lava flows in recent years, is the country's most active volcano; Dabbahu became active in 2005, forcing evacuations; other historically active volcanoes include Alayta, Dalaffilla, Dallol, Dama Ali, Fentale, Kone, Manda Hararo, and Manda-Inakir

earthquakes; droughts; occasional cyclonic disturbances from the Indian Ocean bring heavy rains and flash floods

volcanism: experiences limited volcanic activity; Ardoukoba (298 m) last erupted in 1978; Manda-Inakir, located along the Ethiopian border, is also historically active

Ethiopia is a predominantly agricultural country - more than 80% of the population lives in rural areas - that is in the early stages of demographic transition. Infant, child, and maternal mortality have fallen sharply over the past decade, but the total fertility rate has declined more slowly and the population continues to grow. The rising age of marriage and the increasing proportion of women remaining single have contributed to fertility reduction. While the use of modern contraceptive methods among married women has increased significantly from 6 percent in 2000 to 27 percent in 2012, the overall rate is still quite low.

Ethiopia's rapid population growth is putting increasing pressure on land resources, expanding environmental degradation, and raising vulnerability to food shortages. With more than 40 percent of the population below the age of 15 and a fertility rate of over 5 children per woman (and even higher in rural areas), Ethiopia will have to make further progress in meeting its family planning needs if it is to achieve the age structure necessary for reaping a demographic dividend in the coming decades.

Poverty, drought, political repression, and forced government resettlement have driven Ethiopia's internal and external migration since the 1960s. Before the 1974 revolution, only small numbers of the Ethiopian elite went abroad to study and then returned home, but under the brutal Derg regime thousands fled the country, primarily as refugees. Between 1982 and 1991 there was a new wave of migration to the West for family reunification. Since the defeat of the Derg in 1991, Ethiopians have migrated to escape violence among some of the country's myriad ethnic groups or to pursue economic opportunities. Internal and international trafficking of women and children for domestic work and prostitution is a growing problem.

Djibouti is a poor, predominantly urban country, characterized by high rates of illiteracy, unemployment, and childhood malnutrition. More than 75% of the population lives in cities and towns (predominantly in the capital, Djibouti). The rural population subsists primarily on nomadic herding. Prone to droughts and floods, the country has few natural resources and must import more than 80% of its food from neighboring countries or Europe. Health care, particularly outside the capital, is limited by poor infrastructure, shortages of equipment and supplies, and a lack of qualified personnel. More than a third of health care recipients are migrants because the services are still better than those available in their neighboring home countries. The nearly universal practice of female genital cutting reflects Djibouti's lack of gender equality and is a major contributor to obstetrical complications and its high rates of maternal and infant mortality. A 1995 law prohibiting the practice has never been enforced.

Because of its political stability and its strategic location at the confluence of East Africa and the Gulf States along the Gulf of Aden and the Red Sea, Djibouti is a key transit point for migrants and asylum seekers heading for the Gulf States and beyond. Each year some hundred thousand people, mainly Ethiopians and some Somalis, journey through Djibouti, usually to the port of Obock, to attempt a dangerous sea crossing to Yemen. However, with the escalation of the ongoing Yemen conflict, Yemenis began fleeing to Djibouti in March 2015, with almost 20,000 arriving by August 2017. Most Yemenis remain unregistered and head for Djibouti City rather than seeking asylum at one of Djibouti's three spartan refugee camps. Djibouti has been hosting refugees and asylum seekers, predominantly Somalis and lesser numbers of Ethiopians and Eritreans, at camps for 20 years, despite lacking potable water, food shortages, and unemployment.

Ethiopia - the second most populous country in Africa - is a one-party state with a planned economy. For more than a decade before 2016, GDP grew at a rate between 8% and 11% annually - one of the fastest growing states among the 188 IMF member countries. This growth was driven by government investment in infrastructure, as well as sustained progress in the agricultural and service sectors. More than 70% of Ethiopia's population is still employed in the agricultural sector, but services have surpassed agriculture as the principal source of GDP.

Ethiopia has the lowest level of income-inequality in Africa and one of the lowest in the world, with a Gini coefficient comparable to that of the Scandinavian countries. Yet despite progress toward eliminating extreme poverty, Ethiopia remains one of the poorest countries in the world, due both to rapid population growth and a low starting base. Changes in rainfall associated with world-wide weather patterns resulted in the worst drought in 30 years in 2015-16, creating food insecurity for millions of Ethiopians.

The state is heavily engaged in the economy. Ongoing infrastructure projects include power production and distribution, roads, rails, airports and industrial parks. Key sectors are state-owned, including telecommunications, banking and insurance, and power distribution. Under Ethiopia's constitution, the state owns all land and provides long-term leases to tenants. Title rights in urban areas, particularly Addis Ababa, are poorly regulated, and subject to corruption.

Ethiopia's foreign exchange earnings are led by the services sector - primarily the state-run Ethiopian Airlines - followed by exports of several commodities. While coffee remains the largest foreign exchange earner, Ethiopia is diversifying exports, and commodities such as gold, sesame, khat, livestock and horticulture products are becoming increasingly important. Manufacturing represented less than 8% of total exports in 2016, but manufacturing exports should increase in future years due to a growing international presence.

The banking, insurance, telecommunications, and micro-credit industries are restricted to domestic investors, but Ethiopia has attracted roughly $8.5 billion in foreign direct investment (FDI), mostly from China, Turkey, India and the EU; US FDI is $567 million. Investment has been primarily in infrastructure, construction, agriculture/horticulture, agricultural processing, textiles, leather and leather products.

To support industrialization in sectors where Ethiopia has a comparative advantage, such as textiles and garments, leather goods, and processed agricultural products, Ethiopia plans to increase installed power generation capacity by 8,320 MW, up from a capacity of 2,000 MW, by building three more major dams and expanding to other sources of renewable energy. In 2017, the government devalued the birr by 15% to increase exports and alleviate a chronic foreign currency shortage in the country.

Djibouti's economy is based on service activities connected with the country's strategic location as a deepwater port on the Red Sea. Three-fourths of Djibouti's inhabitants live in the capital city; the remainder are mostly nomadic herders. Scant rainfall and less than 4% arable land limits crop production to small quantities of fruits and vegetables, and most food must be imported.

Djibouti provides services as both a transit port for the region and an international transshipment and refueling center. Imports, exports, and reexports represent 70% of port activity at Djibouti's container terminal. Reexports consist primarily of coffee from landlocked neighbor Ethiopia. Djibouti has few natural resources and little industry. The nation is, therefore, heavily dependent on foreign assistance to support its balance of payments and to finance development projects. An official unemployment rate of nearly 40% - with youth unemployment near 80% - continues to be a major problem. Inflation was a modest 3% in 2014-2017, due to low international food prices and a decline in electricity tariffs.

Djibouti's reliance on diesel-generated electricity and imported food and water leave average consumers vulnerable to global price shocks, though in mid-2015 Djibouti passed new legislation to liberalize the energy sector. The government has emphasized infrastructure development for transportation and energy and Djibouti - with the help of foreign partners, particularly China - has begun to increase and modernize its port capacity. In 2017, Djibouti opened two of the largest projects in its history, the Doraleh Port and Djibouti-Addis Ababa Railway, funded by China as part of the "Belt and Road Initiative," which will increase the country's ability to capitalize on its strategic location.

telecom market challenged by political factionalism and reorganization of ruling party; despite some gains in access, Ethiopia remains one of the least-connected countries in the world; state-owned telecom held a monopoly over services until 2019 when government approved legislation and opened the market to competition and foreign investment; new expansion of LTE services; government reduced tariffs leading to increases in data and voice traffic; government launched mobile app as part of e-government initiative to build smart city; Huawei provides infrastructure to government operator and built data center in Addis Ababa; government disrupted service during political crises; importer of broadcasting equipment from China (2020)

Djibouti has a poor domestic infrastructure and a monopolized telecom system relying on microwave radio relay; rural areas connected via wireless local loop; mobile coverage limited to Djibouti city; despite challenges, foreign investment lends progress toward improvements; one of the best international fiber cables in the region, the Djibouti Internet Exchange, is a meeting point for cable systems passing between the Red Sea and Indian Ocean; national operator managed the Australia West Cable landing and signed an agreement for IP traffic through Paris and Marseille; international operator signed MoU for extension of cable from the Gulf to Djibouti (2021)

Eritrea and Ethiopia agreed to abide by the 2002 Eritrea-Ethiopia Boundary Commission's (EEBC) delimitation decision, but neither party responded to the revised line detailed in the November 2006 EEBC Demarcation Statement; the undemarcated former British administrative line has little meaning as a political separation to rival clans within Ethiopia's Ogaden and southern Somalia's Oromo region; Ethiopian forces invaded southern Somalia and routed Islamist courts from Mogadishu in January 2007; "Somaliland" secessionists provide port facilities in Berbera and trade ties to landlocked Ethiopia; civil unrest in eastern Sudan has hampered efforts to demarcate the porous boundary with Ethiopia; Ethiopia's construction of a large dam (the Grand Ethiopian Renaissance Dam) on the Blue Nile since 2011 has become a focal point of relations with Egypt and Sudan; as of 2020, four years of three-way talks between the three capitals over operating the dam and filling its reservoir had made little progress; Ethiopia began filling the dam in July 2020

Djibouti maintains economic ties and border accords with "Somaliland" leadership while maintaining some political ties to various factions in Somalia; Kuwait is chief investor in the 2008 restoration and upgrade of the Ethiopian-Djibouti rail link; in 2008, Eritrean troops moved across the border on Ras Doumera peninsula and occupied Doumera Island with undefined sovereignty in the Red Sea