Nexus between FDI and Domestic Investment in Ethiopia

Ethiopia has devoted itself to entice foreign direct investment across time. The experiences of many countries have shown that FDI has either supplementary or substitution effects. This paper is geared based on the FDI contribution and intends to reveal the path of influence on domestic investment. Accordingly, the result shows that FDI crowds out private domestic investment despite it is being crowd out by domestic investment through private domestic investment. FDI has no effect on domestic investment in the long run and short run dynamics. The result also found public investment has a crowding in effect for both private domestic investments and FDI in both short run and long run dynamics. This shows that FDI might not be increased in the expense of private domestic investment. Finally, This book aid corporations researchers and public interventionist for further endeavors.