National policies and the international investment architecture. Foreign direct investment refers to direct investment equity flows in the reporting economy. Determinants of foreign direct investment in ethiopia, proceedings of the fourth international conference on the ethiopian economy, vol. However, the competition to attract efficiency or marketseeking fdi firms is tough. Mar 05, 2014 foreign direct investment is in contrast to portfolio investment which is a passive investment in the securities of another country such as stocks and bonds. Challenges, opportunities and policy options for effective use to stimulate industrialization. After the breakneck growth rates that characterised much of of the regions first decade in the 21st century, we are. In their attempt to attract foreign direct investment fdi, most african countries. For further information read ethiopian investment guide 2015 or visit vestethiopia. Fdis in ethiopia their impact on the agricultural sector. Also, a great thank goes to the librarians of the ethiopian investment. The effectiveness of tax incentives in attracting foreign. A time series analysis, london policy studies institute. Though, not consistent, foreign direct investment fdi flows into ethiopia have gradually increased in the last two decades.
Fxd252004 issued on the establishment and operation of foreign currency account for nonresident ethiopians in domestic commercial banks. Determinants of foreign direct investment in ethiopia. Strategic and tactical issues of ethiopias foreign policy. Munich personal repec archive determinants and impediments of fdi in. Ethiopia, like many african countries, took some steps towards liberalising trade and the macroeconomic regime as well as introducing some measures aimed at improving the fdi regulatory framework. Nigeria is the largest oil producer in africa and contributes three percent. Oct 15, 2009 this study has given a first regional overview of the development of global foreign direct investment fdi inflows over the last decade in ethiopia. This thesis is a two part project that investigates the determinants and effects of foreign direct investment fdi in ethiopia. Fdi triggers technology spillovers, assists human capital formation, contributes to international trade integration and helps to create a more competitive business environment. Ethiopia, because of its accelerated economic growth, relative political stability and pivotal role within the au, is a much respected and preferred country for foreign direct investment fdi, and political and diplomatic influence. This paper examines the performance, promotion, and prospects for foreign direct investment fdi in africa.
Investment policy and promotion strategy for ethiopia to 2010. This paper attempts to study the nature and determinants of foreign direct investment in ethiopia over the period 19742001. Impact of foreign direct investment on nigeria economic growth. Privilege to full repatriation of profits, dividends, principal and interest payments on external loan, etc. From tigrai public relations bureau tigrai online, ethiopian news, may 18, 2016. Therefore, this study is done with the main objective. The contribution of foreign direct investment for economic growth of ethiopia. Ethiopia has an embassy in beijing and the peoples republic of china has an embassy in addis ababa. In ethiopian context there is a need to find out about these variables. Commission and ministry of trade for their wonderful assistance of new and unpublished data. Yet, the benefits of fdi do not accrue automatically and evenly across countries, sectors and local communities. Foreign direct investment fdi in ethiopia investing.
Depending on the level of accountability in the recipient country, foreign direct investment fdi could be a blessing or a curse. Nov 16, 2014 though, not consistent, foreign direct investment fdi flows into ethiopia have gradually increased in the last two decades. Dipti ranjan mohapatra foreign direct investment inflows to ethiopia during 1992 to 2012. Pdf on apr 1, 2017, mulu gebreeyesus and others published foreign direct investment in ethiopia. Edu, western michigan university, kalamazoo sisay asefa email. In the united nations conference on trade and developments unctad world investment report 2014, foreign direct investment fdi projects globally could increase to. Foreign direct investment fdi is one of the most striking features of the global economy today. Ii, issue 9 december 2014 12088 macroeconomic variables are the most significant determinants of fdi inflow to a country. Now, therefore, in accordance with articles 6 and 61 of the monetary and banking proclamation no. Definitions and sources of data the ethiopia investment code defines a foreign investor as a physical or juridical person of foreign nationality which has invested imported capital investment proclamation no.
Horizontal fdi arises when a firm duplicates its home countrybased activities at the same value chain stage in a host country through fdi. Structures, opportunities and impacts of fdi in agricultural sector in ethiopia. Even if there is a wellconstructed contract governing the terms and conditions of the investment, some foreign companies may decide to take the money and run. Foreign direct investment fdi is an important topic for developing nations as it brings with it economic development, access to managerial skills, financial resources, marketing expertise, and leads to increased employment. On request of the government, the world bank surveyed 69 chinese enterprises doing business in ethiopia with a 95question survey in mayjune 2012. Foreign investment in ethiopia slumps after business. Foreign direct investment, net inflows bop, current us. In part i of top 5 opportunities for investment in ethiopia, i recommended financial services, telecoms, and heavy constructions as sectors that investors should look into. Peoples republic of china ethiopia relations were established in 1970. Top 5 opportunities for investment in ethiopia part ii. Ethiopia investment policies and incentives and opportunities. Foreign direct investment 253 foreign direct investment. Fikadu asfaw and associates law office falo on 23 aug 2011 related to foreign direct investment in ethiopia. From a neo liberalists perspective fdi triggers technology spillovers, assists human capital formation, contributes to international trade integration, helps to create a more competitive business environment and enhances enterprise development.
Foreign direct investment and its relationship with growth and export in ethiopia ma thesis. This paper measures the impact of foreign direct investment fdi on economic growth in ethiopia based on annual time series data over the period 1974 to 2011. Foreign direct investment in the agricultural sector in ethiopia. Through the use of country specific data bases and complementary expert interview a detailed view of the investment development in ethiopia for the agricultural sector is provided for the years 2000 2008. To a certain extent, this is what we are now seeing across africa. The role of foreign investment in ethiopias leather value chain deborah brautigam, margaret mcmillan and xiaoyang tang in ethiopia, significant potential for private sector transformation lies in the leather value chain. Foreign direct investment fdi development between the. Statistical bulletin, annual reports and statement of accounts. High level political commitment for investment promotion and protection. Feb 15, 2017 foreign direct investment in ethiopia dropped by a fifth in the first half of the countrys fiscal year after violent antigovernment protests in which foreignowned businesses were targeted.
Pdf this paper attempts to study the determinant of fdi in ethiopia for the time period from 19812007. Determinants and impediments of foreign direct investment. The study analyzed the impact of foreign direct investment on nigeria economic growth over the period of 1999 20. Areas of investment opportunities and incentives setting up an investment operating an investment factors at a glance legal and institutional framework annexes 3 5 6 18 22 23 28 32 1 an investment guide to ethiopia. On request of the government, the world bank surveyed 69 chinese enterprises doing business in ethiopia with a 95question survey in may. How does gdp affect the inflow of foreign direct investment in ethiopia. Pdf determinants of foreign direct investment in ethiopia. Impact of foreign direct investment on economic growth of. The lasting interest implies the existence of a longterm relationship between the direct investor and a significant degree of influence on the management of the enterprise.
Foreign direct investment fdi is an investment made by a company or entity based in one country into a company or entity based in another country. Finally, i would like to thank the ethiopian investment. The africa investment report 2016 letter from the editor 1 letter from the editor in markets as in nature, what goes up must come down. Pdf an assessment of challenges and prospects of foreign. Challenges and prospects in solid minerals development in nigeria sunday iduh korea development institute school of public policy mineral development in nigeria has been highly focused on the oil industry. Impacts, opportunities and challenges of fdi in agricultural. The theoretical frameworks will be connected to development and industrialization, brought by foreign direct investments and employmentopportunities in ethiopia. The government is leasing tenth of thousands of hectors of farmland to foreign agricultural firms.
Determinants of foreign direct investment inflow to ethiopia. It is obvious that our country has engaged in farmland deal with foreign agricultural investors. Foreign direct investment and economic development in. Pdf foreign direct investment and its relationship with. This page contains a guide to the existing investment proclamations and regulations. It in particular examines how fdi affects gdp growth, both directly and also conditioning on trade liberalization that ethiopia adopted in early 1990s. This paper discusses the nature, impact, and consequences of indian and chinese foreign direct investment in ethiopia. Factors such as political and macroeconomic instability, low growth, weak infrastructure, poor governance, inhospitable regulatory environments, and illconceived investment promotion strategies, are identified as responsible for the poor fdi record of the region. Chinese investors in ethiopia francoise nicolas 7 the objective of the paper is to examine why and how chinese investments have developed in ethiopia and what may be their impact. Determinants of foreign direct investment in ethiopia project muse. Any kind of asset and any direct or indirect contribution in cash, in kind or in services, invested or reinvested in any.
The survey covered various aspects of the foreign direct investment climate in. The main type of data used in this study is secondary. Foreign direct investment fdi is an integral part of an open and effective international economic system and a major catalyst to development. At the same time, the share of the worldwide fdi flows into ssa has been rather low during the same period. These foreign direct investment advantages and disadvantages provide a foundation for the decisionmaking. Ethiopia has become a preferred destination for foreign direct investment and emerging hub for manufacturing in africa due to its. The high investments in the agricultural sector are basically necessary for a sustainable development but only if a comprehensive policy framework is in place. Ethiopia once the byword for famine in the region is garnering attention from foreign investors. Pdf the contribution of foreign direct investment for economic. The first and third of these objectives, for good policy and for good understanding of. A trend, determinant and impact analyses for the masters degree in this university, is my ownpiece of original research work. This paper analyzes the effectiveness of tax incentive in attracting foreign direct investment to ethiopia. The determinants of fdi include any host countrys situations that affect the inflow of fdi, like market size, the economic growth rate, real growth. It will seek in particular to assess whether ethiopia is a case of a win win.
The determinants of fdi include any host countrys situations that affect the inflow of fdi, like market size, the economic growth rate, real growth domestic product, infrastructure, natural resource, the political situation etc. Department of east asian studies, university of delhi, delhi, 17. Foreign direct investment inflows to ethiopia during 1992 to. The determinants of foreign direct investment in the african. Pdf water implications of foreign direct investment in. Factors affecting fdi flow in ethiopia by alexander. Foreign direct investment and economic development in ethiopia. This thesis is submitted for the master of business administrations mba degree specializing in.
In 20, the average share of manufacturing value added in gdp in subsaharan africa was 11 percent, almost unchanged from the 1990s. Pdf foreign direct investment in the agricultural sector. Determinants and impediments of fdi inflows in ethiopia a. Chinas odi flows to the african continent have grown rapidly over the past decade and ethiopia is a good example of this trend. Foreign investment in ethiopia slumps after business attacks. Political stability and committed government stable socioeconomic governance with sustained peace and security. Chinese foreign direct investment fdi into africa is on the rise and ethiopia is at the forefront of this trend. On request of the government, the world bank surveyed 69 chinese enterprises doing business in ethiopia with a. What makes the chinese fdi unique in ethiopia is almost 60% of these investments are concentrated in the manufacturing sector and infrastructural development, which is different from what happened in other african countries where the chinese fdi is pretty much resource seeking alemayehu geda and atnafu g.
Under a bilateral investment treaty to which ethiopia is a party, investment is defined as. Foreign and domestic investment has been steadily growing in ethiopia. This type of investment occurs when a firm invests to produce a product. However the results of the available empirical evidence on effectiveness of such incentive in attracting fdi are inconsistent. In the united nations conference on trade and developments unctad world investment report 2014, foreign direct investment fdi projects globally could increase to 1. The role of foreign investment in ethiopias leather value chain. Ethiopias primary law concerning foreign investment is the investment proclamation. Foreign direct investment in ethiopia dropped by a fifth in the first half of the countrys fiscal year after violent antigovernment protests in which foreign owned businesses were targeted. Hence, fdi can contribute to higher economic growth and serve as a potent. Water implications of foreign direct investment in ethiopia s agricultural sector. Further i want to thank you christian petersberries from the hbf project office in ethiopia and his team for all the help and time they offered. An empirical analysis european academic research vol. Chinas odi flows to ethiopia rose from virtually zero in 2004, reaching.
The responsible organ for collecting the data on foreign direct investment. Determinants of foreign direct investment in ethiopia westminster. Foreign direct investment is one of the key economic features of the modern globalized world. That can leave an investor with few, if any, options to recover their funds. In conflict prone contexts, foreign investors, especially whose actions while entering a given country were not subject to checks and balances, may undermine political stability and fuel social unrest. Pdf on oct 1, 2009, lucie weissleder and others published foreign direct investment in the agricultural sector in ethiopia find, read and cite all the research you need on researchgate. Areas of investment provided by the ethiopian investment laws for domestic and foreign investors. Edu, western michigan university, kalamazoo abstract the paper examines the effect of price and exchange rate uncertainty and political instability on. The federal and regional governments encourage investment.
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