Browsing by Author "Abebaw Girma"

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    Factors Influencing Foreign Direct Investment (Fdi) in Case of Ethiopia’s Market
    (A.A.U, 2025-06-27) Abebaw Girma; Tewodros Wuhub (PhD)
    The general objective of the study to examine factors influencing foreign direct investment (FDI) in case of Ethiopia’s market. This study employs a quantitative research approach, focusing on secondary data to evaluate economic variables influencing FDI inflows in Ethiopia from 1978 to 2024. An explanatory research design facilitates a systematic analysis using Multiple Ordinary Least Squares (OLS) estimators. Data is sourced primarily from the World Bank, supplemented by the IMF and UNCTAD, ensuring reliability. The research examines key variables: FDI, market size, trade openness, inflation rate, infrastructure development, and financial risk. Stationarity tests, including the Augmented Dickey-Fuller test, confirm data suitability for analysis. The Vector Error Correction Model (VECM) captures both short-run and long-run dynamics, followed by rigorous diagnostic checks to validate results. This study investigates factors influencing Foreign Direct Investment (FDI) in Ethiopia from 1978 to 2024 using the Vector Autoregressive Model (VAR) and Vector Error Correction Model (VECM). Key determinants identified include GDP growth rate, trade openness, gross fixed capital formation (infrastructure), inflation rate, and external debt. A positive relationship between GDP growth and FDI suggests larger markets attract investment. Trade openness enhances market access, while improved infrastructure reduces operational costs. Stable inflation fosters a predictable environment for investors. Although short-run impacts of these variables on FDI are not statistically significant, co-integration analysis confirms a long-term relationship, providing insights for policymakers to enhance FDI attraction. This study explores factors influencing Foreign Direct Investment (FDI) in Ethiopia from 1978 to 2024, identifying GDP growth, trade openness, infrastructure investment, inflation stability, and external debt management as key determinants. Recommendations include promoting economic growth, enhancing trade, investing in infrastructure, maintaining price stability, and improving regulatory frameworks to attract FDI.