The average GDP for the Amhara region (1997 EFY) is estimated to be 15.15 Billion Birr in real terms, of which agriculture and allied activities account for 60.93 per cent while industry and service sectors account for 21.13 per cent and 17 per cent respectively. This implies that agriculture remains to be the dominant economic sector in the region. Thus, development strategies should mainly focus on addressing agriculture-led development industrialization (ADLI), which is a long-term development objective designed at national level. In addition, ensuring food security at household level is another area of concern in the short run.

Moreover, per capita GDP is more realistic and ideal indicator of economic performance. It is computed in terms of crude GDP values to population or GDP per population unit. Hence, high per capita value indicates better economic performance and higher living standards. The per capita GDP for the Amhara region, however, is estimated to be only 812.1 birr, which is well below the national average.

Household income consumption/expenditure, as an economic indicator is imperative to formulate socio-economic development policies and decision making at micro level. It helps to understand the prevailing household living condition and analyze development plans aimed at improving the living standard of the population.

The percentage distribution of households by level of annual income/ expenditure shows the proportion of households under each level of spending. Here, due to the fact that household's actual income is often underestimated for one or the other reason, household expenditures is considered as proxy measures to indicate income levels. In this regard, high level of income/expenditure indicates better living standard. However, in the region, nearly 96 per cent of households fall under low and middle income/expenditure brackets with an income below 1,050 Birr per annum. Moreover, the proportion of households who fall under low-income category is relatively higher (i.e. 12 per cent) than the national average (i.e. 8 per cent). This implies that poverty in the region is widespread and pervasive. Hence, improving the per capita income/expenditure level of each household should be the central objective of our development interventions.

With regard to income/payments/expenditure sources, more than two-thirds (i.e. 67.5 per cent) of households in the region generate their income from agricultural and allied activities while the remaining derive their income from non-agricultural activities. This reveals that agriculture stands to play the dominant role in the household economy.

Besides, household expenditure refers to expenses made by a household or any of its members to sustain a living. It encompasses expenditures on consumption and non-consumption goods and services. Expenditure patterns among households may vary considerably based on the level of income gained and overall living standard. Poor households often spend their income, to a great extent, on basic necessities such as food. Thus, there is a strong correlation between household income and expenditure. As household income increases, the possibility of a household to increase its expenses on non-food and luxury items would be high. In the region, 55 per cent of the household expenditure is spending on food items, which is more than the national average. This implies that the more households spend their income on food the lower would be the domestic saving and investment.

Saving refers to part of the disposable (non consumed) income by a household.  Saving in the region is found to be minimal (i. e. only 4.8 per cent). However, although the absolute figure seems to be relatively better than the national average (i. e. 3.9 per cent), effort should be made to mobilize more saving in order to promote investment in the region.
 

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