The Socia-economic Impacts of Foreign Direct Investment inflows

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Addis Ababa University


Foreign direct investment is one of the most striking features of the global economy today. Understanding this, the government of Ethiopia had issued several investment incentives to encourage the inflows of foreign direct investment. Thus, this study has attempted to identifY and investigate the socia-economic impacts of foreign direct investment inflows to Bishoflu town. To achieve this objective primary and secondary data were collected which is quantitative and qualitative in nature. To obtain this data, questionnaire, FGD and KII was employed where as to collect secondary documented data from different institutions. The main source of data for the study was employees working in selected six (6) foreign firms. The study also employed both probability and non probability sampling techniques. Probability sampling techniques has been used to select respondents from all workers who have been working in selected foreign firms. Purposive sampling method was also employed to collect data from focus group discussants and interviewees which were mainly used to triangulate data collected through questionnaire. The result of the study showed that the inflows of Foreign Direct Investment in to the area have potential Socia-economic contributions and Socia-economic problems. These contributions are job creation, technology transfer, income generation, increasing saving levels of employees, providing of social and economic infrastructure. The problems are failure of the firms to fill the skill gap of employees in use of technology, the farming comfinmity loss productive asset, environmental pollution, distraction social institution and unwise use of investment land. Based on the major finding of the thesis, recommendations were forwarded that could solve the problems. In this regard, improving the skill gap of employees, providing comprehensive approach that enable community to diversifo sources of income, creating awareness, providing technical support for local community and strengthening follow up and after care services are the area that needs emphasis by concerned Regional and local bodies to solve these problems. Key words: Foreign direct investment and Socio-economic impacts



Foreign direct investment, and Socio-economic impacts