The Effects of Foreign Direct Investment on Human Capital Formation: Case of Addis Ababa Area Manufacturing Firms

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Addis Ababa University


Taking the empirical database and gaps the main objectives of this study was to assess the impacts of foreign direct investment on human capital formation in Addis Ababa, Ethiopia manufacturing sectors mainly through basic channels of educational advancement(ED), training(TR), Research and development (R&D) and skill & knowledge transfer(SK).Therefore, this empirical study was conducted to understand the impacts of FDIs on human capital formation Addis Ababa Area Zone. A theoretical foundation was compiled for the study based on the literature review. The research is cross-sectional field survey. For this study a probability sampling was used, 351 employees were selected as the sample of the study. Five point likert scale questionaries’ were adopted and distributed to 351. 336 respondents filled the questioners. The frequency, descriptive statics and regression analysis were used to analyze the study hypothesis using SPSS version 23. The results of the study indicated that the factors listed in the study have a significant effect on human capital formation. Moreover, the results of the study come up with findings training provided by the foreign firms to the employees is the main channel of human capital formation done FDI and the level, quality of infrastructure and low institutional support and linkage comparatively affecting the role of FDIs on human capital building process. Key words: Human capital, FDI, Educational advancement, Training, R&D, skill & knowledge transfer



Human capital, FDI, Educational advancement, Training, R&D, skill & knowledge transfer