This thesis deals with the issue of development and impoverishment among thernKarrayu Oromo of the Upper Awash Valley, Eastern Showa. Before they werernalienated from their land, the Karrayu had full right over the ownership andrnmanagement of their pastoral resources. Their social organization functionedrnwithout the support of modern state structure or the super-imposition of the 'alienrnauthority', as the Karrayu call it, such that it was virtually autonomous andrnflexible. Free movement, which was indispensable for the kind of arid and semirnarid pastoral economy had been the core element of Karrayu pastoralism. Thernsacred grounds along the Awash Valley, beyond its religious importance, hadrnbeen one regulatory element in the seasonal and spatial movement. Thus beforernland alienation, the Karrayu had full advantage of free movement of their herds,rnadequate grazing space, proportional number of population size and flexiblernpolitical organization. In short, Karrayu production had both ecological as well asrnsocio- cultural adaptive forms.rnThe process of marginalization or land alienation, however, set in motion chainsrnof events, which worked against these forms of Karrayu adaptation. It imposed arnnew form of political structure that curtailed the flexibility and autonomy ofrnpastoral social organization. This process in turn transformed Karrayu land rightrnthat created a conducive environment for the Plantation and Park to alienate thernKarrayu from their traditional grazing area. The Development of towns furtherrnexacerbated the process of marginalization by taking more of Karrayu land andrnnegatively attaching them to the market economy. Moreover, the intensification ofrnXIIrnpopulation pressure, due to the Commercial Farm and towns and movement ofrnother pastoral groups into Karrayu territorial domain caused land encroachment,rnand above all, brought-in large number of people which traversed the balancernbetween man, land and livestock. The result was herd loss and destitution on thernpart of the Karrayu.rnThe responses of the Karrayu to the process of marginalization and destitutionrninvolved peaceful and non-peaceful resistance, wage labor employment andrnconcomitant sedentarization and involvement in the share-cropping throughrnfarming, which exposed them to the exploitation of townsmen. It also involvedrnincorporation into market economy through petty trading and charcoal selling.rnHowever, every form of response led to the transformation of Karrayurnsubsistence economy -from producers of their own subsistence to wage laborrnemployment.rnTransformation of Karrayu production system through land alienation, speciallyrnthe loss of sacred grounds, contributed to massive social and cultural changemorernKarrayus are embracing Islam and their social organization is showingrngradual change.