The Determinants of Private Investment in Ethiopia

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Addis Ababa University


Private investment is viewed as a powerful tool for maintaining and expanding the capital formation and production capacity of an economy. Hence, this study was conducted with the main objective of investigating and analyzing factors that determine private investment in Ethiopia. 21- years secondary data(i.e. from 1996 to 2016) was collected from various national and international institutions. Then, OLS regressions model was applied after the data sets were transformed to natural log form. The regression results show that public investment, real GDP, external debt servicing , and access to bank credit have significant positive effect on private investment, while lending interest rate and foreign direct investment have significant negative effect on performance of private investment under the study period. Hence, to promote the performance of private sector in the country, it is essential to take measures that can improve real income of people, and make public investment (Social and Physical) and institutions that are crucial to attract private investment. Besides, strengthen financial institutions to provide sufficient financial resource to private investors.


A thesis Submitted to the Department of Accounting and Finance for the Partial Fulfillment of the Requirement for the Degree of Masters Science in Accounting and Finance


Determinants, Ethiopia, Private investment