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New Strategies for Attracting Foreign Direct Investment in Ethiopia: A Case for Policy Development

초록/요약

Despite Ethiopia’s unprecedented economic growth in the past decade, the country continues to suffer from poverty, low income, unemployment and a low literacy rate amongst other issues that require attention. Access to financial resources is a necessary part of economic development because without capital industrial development is impossible and economic development unlikely. Currently Ethiopia lacks the financial means to address the very many issues and obstacles it faces. One of the crucial ways to obtain financial support is through attracting foreign direct investment. Ethiopia’s economic policies are not proving to be effective enough in regards to the attraction of foreign investment. Effective and clear polices as well as institutional support are lacking for attraction of FDI and diversification of industries. Overdependence on the agricultural sector to carry the economy may prove to be reckless due to the vulnerability of this sector to exogenous factors. Land laws and foreign ownership laws in the financial sector need substantial reform and liberalization. Furthermore, support and funding for export-oriented industries should be emphasized and protection of the import-substituted industries should not be neglected. The purpose of this research is to recommend strategies to improve the agricultural sector, financial sector, industrialization sector, trade and investment sectors, in order to improve the overall business environment for the attraction of FDI. Attracting and diversifying the sources of FDI should be one of the main concerns of the Ethiopian government because development without capital, technology and the expertise of foreign firms is highly unlikely.

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목차

Acronyms and Abbreviations iii
List of Figures iv
List of Tables v

I. Introduction 1

II. Literature Review 6
2.1 Foreign Direct Investment (FDI) 6
2.2 Impacts of Foreign Direct Investment 16
2.3 Foreign Direct Investment in Africa 20

III. The State of Inward FDI in Ethiopia 27
3.1 The Inflow of FDI in Ethiopia 27
3.2 Inward FDI Trends over the Past Two Decades 29
3.3 Ethiopia’s Need for Diversification of Inward FDI 34

IV. Government Policy Issues in Ethiopia 36
4.1 Agricultural Policies 36
4.2 Financial Policies 38
4.3 Industrialization Policies 40
4.4 Trade Policies 42
4.5 Investment Policies 43

V. Conclusion and Policy Recommendations 45

References 49

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