How has the economic landscape in Ethiopia developed since 1991, and how is donor aid involved in this development? Although Ethiopia and the east-African region are renowned for droughts, famine, war and most recently, piracy, there is much undiscovered potential that is far too often overshadowed by these tragic events. So much so, that despite having the ninth largest global population of livestock, and vast amounts of surface water, Ethiopia remains the largest global recipient of food aid globally, and the second largest recipient of aid in sub-Sahara Africa today. This thesis therefore sets out to explore the how and why of economic development in Ethiopia since the fall of the Dergue regime in 1991; how the international community, in particular the European States, and the national government have engaged themselves in these developments, and why policies and engagements are not achieving their goals.