THE CONTRIBUTION OF CHINESE FOREIGN DIRECT INVESTMENT ON THE ECONOMIC GROWTH OF ETHIOPIA

Abstract

The purpose of this paper was to analyze the impact of China’s foreign direct investment on Ethiopian Economic growth using a time series data ranged from 1999 to 2017. Specifically the research was intended to answer the impact of Chinese FDI in the economic growth of Ethiopia, identify the major sectors Chinese foreign direct investment engaged in Ethiopia and its employment contribution. To attain the stated objectives explanatory research design and econometrics analysis were employed. The findings of the study shows the Chinese FDI was engaged majorly on ten sectors such as manufacturing, Real estate, Machinery and Equipment Rental and Consultancy Service and Construction Contracting Including Water Well Drilling. And agriculture, mining, Education. Health, hotel and truism transport and communication and others.Apparently it creates a significant amount of job opportunity for the citizens of the country. The findings of the study further revealed that the chines foreign direct investment is significantly contributing for the gross domestic product of the Ethiopia. The bilateral relation and mutual benefit of the foreign direct investment suggests that the importance of designing optimal investment, trade and industrial policies in the world of emerging China will bring a win-win situation for both Ethiopia and China.