Rural development as a concept and as series of experiments in alternative methods of organising production, welfare and exchange in rural activities has a long history. The 1950s and 1960s was a period of over-optimism. Policy makers confidently sought to increase productivity and per capita income through manufacturing industries. They achieved many successes only to find that most programs were generally benefited the rich and local elites. Gaps between the rich and the poor at all territorial scales and in all sectors increase and economic growth became impossible.
The urban based programs led to expanding bureaucracies, and projects addressed to the poor reached small target populations and often created vulnerable dependency relationship with urban centres. In general, the total number of the poor was rapidly increasing and inequalities of income, land, resource and access to services were becoming more limited.
Ethiopia is a pre-industrial agrarian economy, which more than 45 percent of its GDP originate from agriculture and 85 Percent of the total population lives in the rural area. The country's human and physical resource is enormously high, however, it is one of the least developed countries in the world having a structurally deficient and backward economy.
Many economists argue that the main reasons for such backwardness of the economy are inappropriate policies. For example, despite the importance of agriculture and rural sector in general, successive policies adopted in the past did not follow strategies that encourage the small holder agriculture. Thus, due to the neglect of this sub-sector, agricultural productivity has been very low. The application of modern agricultural inputs and basic extension services in these farms remained almost none. Accordingly, output in relation to both manpower and area has been extremely low.
The application of these modern agricultural inputs is highly related with the purchasing power of the peasant. Furthermore, since the application of inputs is an investment, land ownership right is also among the determinant factors. Accordingly, the aim of this thesis is to discuss the impact of economic policies in rural development with particular reference to land tenure system, rural credit, and agricultural marketing and pricing policies as major policy issues rural development in Ethiopia. Accordingly, each of the above policy issues has been discussed in a separated chapter by critically analysing the historical background, one's impact on rural development, and by commenting on the possible policy amendments to achieve sustainable economic development in the future.