A Project Report On The Effectiveness of the Ethiopian Investment Policy

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This is a study that aims at evaluating the success of the Ethiopian investment policy m achieving its goals. Success in this study is measured in terms of the rate of execution of accredited investment projects and the resulting capital generated and jobs created. In this regard facts reveal below average success. However the composition of foreign investment projects which is dominated by the manufacturing sector is in line with the country's development program and can potentially allow the transfer of technology and managerial skills. The Ethiopian investment climate is characterized by fluctuating capital inflow and employment creation due to different social, political and economic factors that affect the operation of foreign investment projects in the country. In an attempt to make a practical examination of the effectiveness of the investment policy the study has considered 3 foreign direct investment firms engaged in the three dominant sectors in which foreign investors are engaged namely agriculture, manufacturing, and construction. The core points of focus of the study in examining the effectiveness of the policy were issues related to technological transfer, employment generation, managerial skill development and ,salary and benefits. In addition to these, the study has attempted to see the possible effects of the foreign companies on local firms in encouraging business activities through creating backward and forward linkages. There was also an attempt to get a clear picture of the investment climate by incorporating views and facts from officials in the investment agency who are in charge of licensing promotion and following up of foreign investment ventures in Ethiopia. Based on the findings of the study, there has been a controversial outcome as far as the transfer of appropriate technology is concerned, while the transfer of skills to employees as well as improvement in salary and benefits has been encouraging, there is minimal success in attaining the development of local businesses through linkages with the foreign companies as they purchase most of their inputs and sell most of their products in foreign markets resulting in a weak backward and forward linkage with local firms. In putting the pieces together Ethiopia hasn't done its homework to enjoy the fruits of foreign direct investment, making it necessary for every stakeholder to do their level best to change the story.


The Case of Foreign Direct Investment (FDI) Submitted In Partiat Fulfillment for a Masters Degree in Busin.e ss Administration


Effectiveness of the Ethiopian, Investment Policy