Regassa, TeferiNegash, Shiferaw2018-07-162023-11-042018-07-162023-11-042014-06http://etd.aau.edu.et/handle/123456789/8793Foreign Direct Investment (FDI) plays an important role as an engine of employment, technological development, productivity enhancement, economic intensification, and more importantly, as an instrument of technology transfer, specially from developed to developing countries. The Government of Ethiopia having realized the inadequacy of the domestic capital and low national saving, opened several economic sectors to foreign investors. The government has also issued several investment incentives, including tax holidays, duty free import of capital goods and export tax exemption to encourage foreign investment. The very essence of this research is assessing the contributions of FDI to the development of SZO in terms of local employement creation, generation of revenue, transfer of technology, linkage with domestic firms in boosting local productivity.It assessed the effectiveness of FDI in the development of SZO and at the same time challenges that hinder the effectiveness of FDI were also identified.SZO is one of the investment potentioal zone found at the very vicinity of Addis Ababa. This study employed mixed research method where both qualitative and quantitave data were used in the assessment.Questionnaires and interview were the main instruments used to gather first hand information from experts, FDI owners and key officials of zonal investment offices and regional investment Commission.The sampling methods used were both probability and non probability sampling. Purposive sampling was used to select experts with better knowledge and information from different sectoral offices. FDI owners were selected randomly from 53 FDIs operating in different sectors. The study sample includes 60 experts from different offices, 18 FDI owners and two officials.Totaly 80 respondents were involved in this study. The result of this study indicated that the contribution of FDI to the development of SZO has been constrained by various challenges of infrastructure, institutional buearucracy, and other organizational and human elements.Therefore it requires an effective mitigation of those challenges and impediments enhancing basic infrastructure provision, training and developing skilled manpower,institutional reforms,enforcement of technology transfer and timely implementation of projects, regular environmental auditing as well as a continous follow up or monitoring for effective implementation of FDI projects to exploite all the benefits of FDIen-USSpecial zone of oromiaThesis