Evaluation of private investment performance
Evidence from Ethiopia
Keywords:
Private investment, performance, GDP per-capital, Inflation rate and EthiopiaAbstract
In Ethiopia, there has been various economic and political reforms for the last ten years which can motivate private investors. Even though, some improvements have been registered as a result of such reforms, the performance of private sectors became low. This study conducted to evaluate the performances of private investment in regional distribution, sector contribution, and ownership structure and employment creation. The result shows that Most of private investment projects are concentrated around Addis Ababa, with manufacturing and service sectors. In Ethiopia, foreign private projects are capital incentive while Domestic private projects have higher share in employment creation. Emerging regions in the country exhibited small number of private projects as compared to other regions. Identified variables for the study includes private investment, inflation rate, abroad money supply, GDP per capital, interest rate, exchange rate, public investment, and external debt. To enhance the analysis, Econometrics model with OLS using multiple regression was applied. The result shows that GDP per-capital, and external debt have significant positive long run effect on private investment, while broad money supply and average exchange rate have negative long run effect. Broad money supply, GDP per-capital, and external debt have significant short run effect.
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