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During colonial times as European powers steadily exploited the resources of most African countries, the Ethiopian kingdom—situated in the Horn of Africa—maintained its independence except for a brief Italian occupation during World War I. The last emperor was replaced with a socialist military junta in 1974, setting the stage for two decades of fighting marked by massive famine. By the mid – 1990s, Ethiopian rebels had overthrown the government and established the Federal Democratic Republic of Ethiopia. When Eritrea won its independence in 1993, Ethiopia lost access to the Red Sea.

Agriculture has a long history in Ethiopia, and scholars have traced the origin of coffee, grain sorghum, and castor bean to the ancient kingdom. While the constant threat of drought has frequently played havoc with Ethiopian crops, the region has a long history of prosperity and profitable linkages in pre-modern global trade.

Recently, however, a dramatic collapse of civil society, governance, and the regional economy has taken place. Less than 16 percent of the population is urbanized and 80 percent of the work force is engaged in agriculture and animal husbandry, which provide 50 percent of Gross Domestic Product and 60 percent of export revenue. Coffee has traditionally been the chief crop, but low prices and political unrest has resulted in a collapse in that sector. As a result of economic downturn and military conflict, Ethiopia has become the ninth poorest country in the world, with a per capital income of only $800. In 2001, Ethiopia was approved for participation in the International Monetary Fund's (IMF) Highly Indebted Countries initiative and had its IMF debt forgiven in 2005. Half of the population of Ethiopia lives in abject poverty, and 46 percent are severely undernourished. The United Nations Development Program UNDP Human Development Reports rank Ethiopia 170 of 232 countries on overall quality of life issues.

Although landlocked, Ethiopia has 7,444 square kilometers of inland water sources. Lake Tana in Northwest Ethiopia is particularly important because the Blue Nile, considered the chief headstream of the Nile River by water volume, rises there. Ethiopia shares land borders with Djibouti, Eritrea, Kenya, Somalia, and the Sudan. Ethiopia's terrain is marked by high plateaus with a central mountain range that is divided by the geologically active Great Rift Valley. Over time, rivers have cut deep gorges into the mountains. Ethiopia is subject to both earthquakes and volcanic eruptions. Elevations range from 125 meters at the Denakil Depression to 4,620 meters at Ras Dejen. The climate of Ethiopia is tropical monsoon with great variations according to topography. Natural resources are limited to small deposits of gold, platinum, copper, potash, natural gas, and hydropower.

Ethiopia's current population of 74,700,000 is undergoing great changes as Ethiopians return from the Sudan and refugees from the Sudan, Somali, and Eritrea leave Ethiopia and return to their homelands. Ethiopia is vulnerable to a number of the diseases of poor African nations. Suffering from a 4.4 HIV/AIDS rate, 120,000 people have died, and 1.5 million are living with the disease. Less than a fourth of the population has sustained access to safe drinking water, and only 6 percent of the entire population has access to improved sanitation. Consequently, Ethiopians have a very high risk of contracting food and waterborne diseases such as bacterial and protozoal diarrhea, hepatitis A and E, and typhoid fever and the respiratory disease, meningococcal meningitis.

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