Determinants of foreign direct investment in ethiopia pdf

Determinants of foreign direct investment in ethiopia. A senior essay submitted to the department of economics in pa rtial fulfillment of the requirement for degree. It in particular examines how fdi affects gdp growth, both directly and also conditioning on trade liberalization that ethiopia adopted in early 1990s. Chinas odi flows to ethiopia rose from virtually zero in 2004, reaching.

Secondary data for 20 years for 14 subsaharan africa countries was collected from the world banks world development indicator database, the world governance indicator and political risk services international. Determinants of foreign direct investment inflow to ethiopia. This thesis is submitted for the master of business administrations mba degree specializing in. As a result, empirical findings on the determinants of fdi are quite chaotic and misleading sometimes. The objective of this study is to shed light on the determinants of foreign direct investiment fdi in developing countries. Nyambe the department of economics, university of namibia, pbag 301 windhoek, namibia abstract foreign direct investments are a challenge to attract, good to host and worse to see leaving. The most important forces behind foreign direct investment are found to be the gdp per capital, gdp growth rate, real interest rates, inflation rate, gross capital. On request of the government, the world bank surveyed 69 chinese enterprises doing business in ethiopia with a. Determinants of foreign direct investment in south africa lie in the net rate of return, as well as the risk profile of foreign direct investment liabilities. The views expressed in this working paper are those of the authors and do not necessarily represent. Determinants of foreign direct investment in ethiopia, proceedings of the fourth international conference on the ethiopian economy, vol. The results show that variables like real growth domestic product, liberalization, exchange rate devaluation, and trade openness are significant and. Chinas odi flows to the african continent have grown rapidly over the past decade and ethiopia is a good example of this trend. Pdf determinants of foreign direct investment in ethiopia.

Determinants of foreign direct investment in developing countries asarc wp 2010 3 predicted. Ethiopia was under command and closed economy system until 1991. Determinants of foreign direct investment inflows to sub. Chinese foreign direct investment fdi into africa is on the rise and ethiopia is at the forefront of this trend. With the help of eviews 7 software, this study used the ordinary least square ols estimation methods to examine the relationship between foreign direct investment. Of particular importance is the question of whether lowincome states must permit or tolerate poor worker treatment to secure foreign investment in lowskilled industries, like. Foreign direct investment fdi in ethiopia investing. Anyanwu is a lead research economist, development research department, african development bank j. Over the past two decades, governments worldwide have continued to liberalise restrictions on international investment with only occasional relapses. Most countries in the world are working hard to attract more foreign direct investment. The perfect market assumes that there exists competition for investment, equal opportunity, and there is equal return on investment across the countries. Mesfin menza a senior essay submitted to department of economics of arbaminch. Identifying the key determinants of foreign direct investment is therefore seen as a crucial task for policy makers. Also, a great thank goes to the librarians of the ethiopian investment.

Determinants of foreign direct investment inflow in tanzania. International journal of business and economic development, vol. Determinants of foreign direct investment in ethiopia project muse. As tolerance towards corruption tends to vary from country to country, countries are disaggregated into developed economies and developing economies. The paper used the annual time series data which covered the period between 19902015.

The determinants of fdi include any host countrys situations that affect the inflow of fdi, like market size, the economic growth rate, real growth domestic product, infrastructure, natural resource, the political situation etc. Though, not consistent, foreign direct investment fdi flows into ethiopia have gradually increased in the last two decades. The major determinants of economic growth in the united states are total factor productivity growth, domestic investment growth, and foreign direct investment growth. Using dynamic panel data estimation techniques, the study identifies a number of factors that affect fdi flows in africa, including, agglomeration economies, natural resources, real gdp growth, and international investment agreements. At the same time, the share of the worldwide fdi flows into ssa has been rather low during the same period. Ethiopia, like many african countries, took some steps towards liberalising trade and the macroeconomic regime as well as introducing some measures aimed at improving the fdi regulatory framework. Impact of foreign direct investment on economic growth of. This paper attempts to study the nature and determinants of foreign direct investment in ethiopia over the period 19742001. In 20, the average share of manufacturing value added in gdp in subsaharan africa was 11 percent, almost unchanged from the 1990s. C52,f21,f23 abstract empirical studies of bilateral foreign direct investment fdi activity show substantial differences in specifications with little agreement on the set of covariates that are or should be included.

Walsh and jiangyan yu july 2010 abstract this working paper should not be reported as representing the views of the imf. Evidence from ethiopia haregewoyn deyu aga msc department of economics debremarkos university abstract this study examined how the foreign direct investment inflows in ethiopia is determined by, the financial. Compared to other parts of the world, the performance of subsahara african countries in attracting foreign direct investment is poor. To ward best outcomes from foreign direct investment in. The study will focus on the time period between 19812007. Best outcomes from foreign direct investment 335 experiences of lowincome states. Strategic and tactical issues of ethiopias foreign policy. A trend, determinant and impact analyses for the masters degree in this university, is my ownpiece of original research work.

The determinants of foreign direct investment empirical evidence from bahrain ahmad mohammad obeid gharaibeh assistant professor dept. Introduction investment is an act of current spending for expected future return. The determinants of foreign direct investment fdi in ethiopia a time series analysis. Ethiopia, gabon, gambia, the determinants of foreign direct investment in the african union. Determinants and impediments of fdi inflows in ethiopia a. Determinants and impediments of foreign direct investment. This thesis is a two part project that investigates the determinants and effects of foreign direct investment fdi in ethiopia.

Examining the determinants of fdi inflows in india 229 effect. Foreign direct investment fdi is an important topic for. It expands the productive capacity of a nation and plays a crucial role in the economic growth and development process. Hence, fdi can contribute to higher economic growth and serve as a potent. Investigating the determinants of foreign direct investments in namibia jones s. A timeseries analysis, paperprepared for the 4th international conference on the ethiopian economy, 1012 june, addis ababa, ethiopia. The determinants of foreign direct investment do statutory restrictions matter. A sectoral and institutional approach prepared by james p. This paper measures the impact of foreign direct investment fdi on economic growth in ethiopia based on annual time series data over the period 1974 to 2011. National determinants of investment flows into ethiopia a. In order to undertake it, we performe a econometric model based in panel data analysis for 38 developing countries including transition economies for the 19752000 period.

The determinants of foreign direct investmentempirical. From this analysis, it derives lessons for lowincome states in the contemporary period. Determinants and trend of foreign direct investment in. Quazi 2007 estimates the determinants of fdi to nine latin american. The period 20012011 is characterized by the remarkable flow of foreign direct investment fdi to despite the fact that the rate. Foreign direct investment fdi is an integral part of an open and effective international economic system and a major catalyst to development. Ethiopia, because of its accelerated economic growth, relative political stability and pivotal role within the au, is a much respected and preferred country for foreign direct investment fdi, and political and diplomatic influence. Journal of economics, business and management, vol. These are the two least recipient regions of global fdi.

Fdi triggers technology spillovers, assists human capital formation, contributes to international trade integration and helps to create a more competitive business environment. The scope of this paper is limited to the determinants of fore ign direct investment in ethiopia. Semantic scholar extracted view of determinants of foreign direct investment in ethiopia by solomon mamo woldemeskel. A time series analysis, london policy studies institute. The determinants of fdi include any host countrys situations that affect the inflow of fdi, like market size, the. The finding assert that the economys market size, domestic investment, openness of the economy, government consumption expenditure, inflation, exchange rate, debt servicing burden, interest rate, road infrastructure and governance quality are the main determinants of foreign direct investment in ethiopia. Note unctad serves as the focal point within the unite d nations secretariat for all matters related to foreign direct investment and transnational corporations. National policies and the international investment architecture. Determinants of foreign direct investment in developing. A behavioural economics and historical approach,the journal of socioeconomics, 34,p 530531. Determinants of foreign direct investment in africa.

Whereas, exchange rate volatility, corruption, and lack of clear policies and regulatory impediments were identified as the three main factors that have the potential to deter foreign investment in ethiopia. Determinants of foreign direct investment in ethiopia academia. Determinants of foreign direct investment inflows to africa, 19802007 john c. This study examines the impact of foreign direct investment fdi on economic growth and its determinants in east african countries. This further to investigate how ssa countries compare in their fdi determinants with other countries from the middle east and north africa mena. Causal relationships between foreign direct investment growth and economic growth is unidirectional, running from foreign direct investment to economic growth. The determinants of foreign direct investment in the. This necessitates undertaking more and more empirical study with well defined variables and new data sets to clearly understand the determinants of. The results show that variables like real growth domestic product, liberalization, exchange. The determinants of fdi include any host countrys situations that affect the inflow of fdi, like market size, the economic growth rate, real growth. Determinants of foreign direct investment in ethiopia westminster. Foreign direct investment and malaysias stock market.