Determinants of Foreign Direct Investment

Understanding its contribution in supporting countries growth and development, currently, Foreign Direct Investment obtains a better attention in Ethiopia. However, it entails an appraisal to answer what really determine the inflow of FDI in Ethiopia and what measures has to be taken to augment its existing growth? This study examined how the Foreign Direct Investment inflows in Ethiopia is determined by, the financial sector development, domestic investment, lending interest rate, exchange rate, human capital development ,trade openness and domestic market potential in Ethiopia. The paper tried to give a thorough attention for those variables, which were not incorporated in previous researches like financial sector development and domestic investment.In doing so, the study used a VECM with co-integration based on secondary data from 1975-2014 collected from various sources.The author thought that the book may use for those students who planned to work around the title and for new endeavors to know the investment situation in the country in general.