Tufa, Adane (PhD)Fantaye, Yonas2018-12-072023-11-192018-12-072023-11-192016-06http://etd.aau.edu.et/handle/12345678/15022This paper gives an analysis on Macroeconomic determinants of Foreign Direct Investment (FDI) in Ethiopia based on a time series data using the period from 1982 to 2014G.C. It is also examines the trend of FDI inflows to the country. The study also discusses why Ethiopia is conducive for Foreign Direct Investment and the area of opportunity. In order to point out the main macro level factors that can highly affect the inflow of FDI in Ethiopia and to know how much these factors affect FDI leading to an oscillating trend. The study took the macro level data in Ethiopia, such as, infrastructure development, potential economic growth, macroeconomic stability, human capital development and Trade openness. In addition, the study gives an extensive account to the theoretical explanation of FDI based on both macro and micro perspectives. Findings show that, in the long run explanatory variable such as infrastructure development, potential economic growth and Trade openness are found positively related and statistically significant while Inflation Rate and Human Capital (illiteracy level) are negatively related and statistically significant. Its parallel with the hypothesis of growing economy attracts more FDI and higher illiteracy level hampers FDI inflows. On the other hand, in the short run tele per 100, Gross Fixed Capital Formation, Openness and Potential Economic Growth become negatively related and they are statistically insignificant where as illiteracy rate and inflation are positively related and statistically significant. . In general, the major implication of this study is that, in Ethiopia foreign direct investment is more determined by sufficient infrastructural activities, higher economic growth, and macroeconomic stability, educated human capital and unrestricted trade in the long run. Hence, in order to increase the inflow of FDI, it is very crucial to concentrate on the mentioned macro economic sectors.enMacroeconomic DeterminantsThesis