This paper presents a review of government development policies and their impact on poverty reduction in Ethiopia. In the paper an attempt is made to identify policies; especially with regard to Agriculture sector, as it is the back bone of the livelihood of the people more than 85 percent in Ethiopia. Due to this reason, every development policy in the country is devised in line with this sector so that technology transfer is possible from agriculture to industry. This is why the government of Ethiopia is following a policy known as ADLI, agricultural development lead industrialization.