Ethiopian has had long-standing bilateral relations with the Arabian Peninsula dating back tornancient Axumite kingdom. The relations were manifested in terms of religion, economic, andrnpolitical aspects. In all of these contacts, the interaction has had both challenges andrnopportunities. For instance, starting from 1932 (after the formation of Saudi Arabia, takingrnmuch of Arabian Peninsula) until 1991, there were no active relations between Ethiopia andrnSaudi Arabia. However, 1991 was the turning point in the relation between the two countries.rnIn these years, economic interactions took more importance though political and religiousrncontacts still have significance.rnThis research thesis looks into post-1991 Ethiopia and Saudi Arabian economic relations:rntaking agricultural investment and trade as the main focus. It aims to understand thernchallenges and opportunities that these agricultural investment and trade bring to Ethiopiarnwhen the country conducts its economic relation with Saudi Arabia. The study argues thatrnSaudi Arabia has strategic, religious and economic interest towards Ethiopia. But due tornpolitical development in Ethiopia after 1991, economical interests prevailed over otherrninterests.rnIn view of this, the objective of this thesis is to provide empirical evidences regarding thernadvantages and disadvantages of agricultural investment and the types of export and importrnitems that Ethiopia and Saudi Arabia are trading with each other. The thesis indicates thatrntrade relations and Saudi investment in agricultural sector are increasing tremendously inrnrecent years. To study these issues, the thesis has used qualitative research methodology. Inrnchapter two and three, available literatures were reviewed to discus about historical relationsrnof the two countries. Concerning advantages and disadvantages of the agricultural investment,rnunstructured interview were conducted with workers of Saudi Star Agricultural Company,rnresidents in Gambella, and pertinent officials in agricultural areas.rnThis study tries to answer research questions: Why has Saudis economic interest increasedrnafter 1991 in Ethiopia? What are different factors for trade imbalance which is usually in favorrnof Saudi Arabia? What are the roles of Saudi agricultural investment for the food security inrnEthiopia? The findings from data analysis showed that the economic relationships between therntwo countries are in favor of Saudi Arabia in agricultural investment and trade. With regard tornagricultural investment, Saudi investments in this sector do not solve food insecurity inrnEthiopia; it is merely for export to the Saudi market. Also, available data show that Ethiopia imports more commodities from Saudi Arabia than it exports