Effects of Losing Eligibility to AGOA on Foreign Investment of Bole Lemi and Kilinto Industrial Parks, A Qualitative Case Study
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Date
2022-09
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Addis Ababa University
Abstract
Foreign direct investment is generally acknowledged as the driving force of Ethiopia’s economy. It is the source of foreign currency, new technology and knowledge. One of the ways of attracting such investment is providing investors with suitable platform for them to “Plug and Play”. This is manifested in the function of industry parks in Ethiopia. Yet, since 2021, the country faced economic sanctions of different kind that reached as far as denying AGOA benefits. The research reported in this project was initiated to investigate the effect of losing eligibility to AGOA benefits on the foreign investment of the industry parks by considering the cases of Bole Lemi and Kilinto IPs. The methodology adopted was mixed, mainly a qualitative approach supported by quantitative analysis of some data. The research employed data from secondary sources to compare the net FDI inflow pre and post AGOA decisions. The research has revealed two different results. One is the economic sanction imposed on the country in the form of removing its AGOA benefits has not affected the foreign investment in the two industry parks as the financial reports and interviews indicate. Whereas questionnaire surveys, international economic indicators and literatures indicate there is effect on foreign investment due to the sanction. The research has also reported COVID 19 pandemic and the conflict in the northern part of the country as major contributors to the result stated above. Therefore, along with mitigations, best practice recommendations to study the issue in depth were provided.
Key Words: Foreign Investment, Economic Sanction, AGOA, Industry Parks, Ethiopia