The Determinants of Foreign Direct Investment Inflows in Ethiopia (Time Series Data Analysis from 1998 up to 2018)
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Date
2020-06
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A.A.U
Abstract
This research paper is aimed to explain the causal effect of determinants of the foreign direct investment inflow in Ethiopia on time series data analysis for the consequence last two decades from 1998-2018. To attain the objective of the study, explanatory research design was applied. Before proceed to analyze the collected data, the data’s stationary and integration test has been conducted to the end of maintaining the relevancy and validity of the paper. Using Eviews application, the stationary of the data has been checked at level and first difference. Both short and long run integration among the independent and dependent variables were observed. Besides to this the correlation test has been conducted in order to known what kinds of association each variables has with the FDI. Based on the finding except inflation rate, the rest variables have positive and strong correlation with FDI. Based on analyses of secondary date of time series finding of the analysis indicates only 61 % of determinants are influenced the foreign direct investment inflows in to Ethiopia and the others rest one hold by others factors which are not mentioned under the study. Then try to identify those factors. According to the reports and the response of the concerned bodies in investment Bureau, the leading determining factor towards FDI is the political instability. Low access to modern market and corruption of the country followed by unclear and complex autocracy and policy related problem are major other factor accounted for decline foreign direct investment over years.
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Keywords
Foreign Direct Investment (FDI), Political Situation, Ethiopian Investment