Browsing by Author "Kedir, Remla"

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    The Impact of Foreign Direct Investment on Poverty Reduction in Ethiopia: Co-integrated Var Approach
    (Addis Ababa University, 2012-12) Kedir, Remla; Hassen, Syed (PhD)
    Many developing countries are competing to attract foreign direct investment with a belief that it can be a tool for poverty reduction. The Ethiopian government has opened several economic sectors to foreign investors and issued several investment incentives for foreign investors. Since the market oriented economic reforms took place in 1992 emphasis has been given to attracting FDI. In this study, the relationship between FDI and poverty reduction is analyzed empirically. It is based on secondary data which was collected from the Ethiopian investment agency, UNCTADs database and the World Bank’s world development indicators. The period covered in the study is 1970-2009. The model was estimated using the Co-integrated VAR approach. The results show that FDI has a negative, impact on economic growth and hence does not reduce poverty in the country. This may be due to the under development of human capital, backward institutions, crowding out of domestic investment or other reasons which require further investigation. The fact that FDI does not contribute to poverty reduction has an important implication for policy makers, especially trade and FDI policies must be checked closely in order to make FDI growth enhancing in Ethiopia