Browsing by Author "Bayu Addisu"

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    Determinant of Foreign Direct Investiment in Ethiopia
    (A.A.U, 2021-06) Bayu Addisu; E. Girma
    This paper examines the determinant of foreign direct investment in Ethiopia. The study applies the ARDL model in order to make an appropriate analysis of the effects of the variables on foreign direct investment by using time series data covering a period of 1984-2019, which was collected from Word Bank and Nation Bank of Ethiopia. GDP growth rate, gross fixed capital formation, trade openness, inflation rate, real effective exchange rate and labour growth rate are the variables used in the study. According to the empirical finding of the study in the long run gross capital formation and trade openness affects FDI positively while inflation rate affect FDI inflows negatively. In addition, real effective exchange rate and labour force growth rate has positive impact on FDI inflows. While GDP growth rate has positive effect on FDI inflows in Ethiopia in the long run but not statistically significant. In the short run GDP growth rate and trade openness has a negative effect on FDI inflows and they are statistically not significant while gross capital formation and real effective exchange rate has a positive effect on FDI and statistically significant and inflation rate has negative impact on FDI and statically significant. The study suggests that the government should have facilitate infrastructure development, government needs strong monetary and fiscal policy in order to reduce inflation rate and, adopt outward looking growth strategy.