Foreign Direct Investment Vs Domestic Private Investment in Ethiopia

¿Realizing the inadequacy of the domestic capital to finance investment needs, Ethiopia has opened several economic sectors to foreign investors especially after 1992 to have sustainable economic growth (EIA, 2012). However ¿The impact of foreign direct investment on economic growth of host country, determined further by whether it crowd-in or crowd-out domestic investments¿ (Agosin,R and mayor, 2000). The book emphasizes on the interrelationship between foreign direct investment and domestic private investment. The author employs vector auto regressive model to know the relationship between foreign direct investment and domestic private investment. The study shows that foreign direct investment crowds-out domestic private investment. In addition, foreign direct investment does have not significant effect on economic growth of Ethiopia; But Domestic private investment complements growth trajectory¿