Browsing by Author "Wubu, Wondwesen"

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    The Impact of Foreign Capital Inflows on Economic Growth, Savings, and Investment in Ethiopia
    (Addis Ababa University, 2011-05) Wubu, Wondwesen; Geda, Alemayehu (PhD)
    This study analyzes the effect of Foreign Capital Inflow (FCI) on the economic growth, saving and investment in Ethiopia for the period 1974/75 to 2008/09. Empirical analysis has been performed by using Johansen Maximum likelihood method. The main result shows that foreign aid has a significant and positive effect on economic growth in the long run as well as in the short run. It has also positive and statistically significant effect on investment in the long run. However, aid has insignificant and negative effect on saving in the long run while it has significantly negative influence in the short run. The net FDI has negative impact on economic growth in both long and short run where as Foreign direct investment has positive and statistically significant effect on saving both in the long and short run. The result further reveals that net FDI has insignificant but positive effect on investment. In the context of policy recommendations, it is clear that aid contributes positively to economic growth both in the long run and short run. So, Ethiopia should focus on aid for the sake of economic growth. In addition, attention should be given in improving the political environment so as to raise the aggregate investment.