Impact Foreign Direct Investment on Domestic Private Investment in Ethiopia

Master's Thesis , 2014 , 32 Pages , Grade: very good

Business economics - Economic Policy

The study was conducted to know the interrelationship between foreign direct investment and domestic private investment. The researcher employs a vector auto-regressive model with appropriate investigation of impulse response and variance decomposition. In addition, the researcher computes descriptive analysis. The study used time series data ranging from, 1970-2012 for econometric analysis and 1992-2012 for descriptive analysis.
The result shows that foreign direct investment crowds-out domestic private investment. In addition, foreign direct investment does not have significant effect on economic growth. Secondly, Domestic private investment complements growth trajectory. However, expansion of domestic private investment does not welcome foreign direct investment.

Inhaltsverzeichnis

• Introduction
• History and Trend of Foreign Direct Investment
• History and Trend of Domestic Private Investment
• Link between Foreign Direct Investment and Domestic Investment
• Methodology
• Data and Empirical Results
• Conclusion
• Bibliography

Zielsetzung und Themenschwerpunkte

This study aims to investigate the relationship between foreign direct investment (FDI) and domestic private investment (DPI) in Ethiopia. The study employs a vector auto-regressive (VAR) model to analyze the impact of FDI on DPI and economic growth. The study also examines the role of DPI in attracting FDI and its contribution to economic growth.

• The impact of FDI on DPI in Ethiopia
• The impact of FDI on economic growth in Ethiopia
• The role of DPI in attracting FDI
• The contribution of DPI to economic growth in Ethiopia
• The relationship between FDI and DPI in the context of Ethiopia's economic development

Zusammenfassung der Kapitel

The introduction provides a background on the importance of investment for economic growth, particularly in developing countries. It highlights the role of domestic savings and the need for foreign capital inflows to bridge the gap between investment and savings. The chapter also discusses the potential benefits and challenges of FDI, emphasizing the need for a favorable policy environment to attract and direct FDI towards key sectors.

The second chapter examines the history and trend of FDI in Ethiopia. It traces the evolution of FDI policies and reforms implemented by the Ethiopian government to attract foreign investment. The chapter highlights the increasing inflow of FDI in recent decades, attributed to the creation of a more hospitable investment environment.

The third chapter focuses on the history and trend of DPI in Ethiopia. It discusses the role of the private sector in economic development and the challenges faced by DPI in Ethiopia. The chapter highlights the government's efforts to promote DPI and the need for further development of the domestic private sector.

The fourth chapter explores the link between FDI and DPI. It examines the potential for FDI to crowd-in or crowd-out DPI, considering factors such as competition, technology transfer, and information asymmetry. The chapter also discusses the reverse impact of DPI on FDI, highlighting the role of domestic investors in signaling the investment climate to foreign investors.

Schlüsselwörter

The key words and focus themes of the text include foreign direct investment, domestic private investment, economic growth, Ethiopia, crowding-out effect, crowding-in effect, investment climate, policy environment, and economic development.

• Course: Msc in Economic Policy Analysis
• Grade: very good
• Author: Tibebu Aragie (Author)
• Publication Year: 2014
• Pages: 32
• Catalog Number: V287286
• ISBN (eBook): 9783656879183
• ISBN (Book): 9783656879190
• Language: English
• Tags: impact, foreign, direct, investment, domestic, private, ethiopia