Foreign Finance, FDI-Climate Interaction and Economic Development in Ethiopia: A Time Series Analysis
Journal Title: International Journal of Multidisciplinary Research and Analysis - Year 2024, Vol 7, Issue 11
Abstract
Developing countries such as Ethiopia, over the years particularly after the cold war, starting from early 1990s have adopted neoliberal policies through reforms to attract foreign finance for development needs in view of inadequacy of domestic capital for public and private investment. However, despite the inflow of foreign capital into the economy, it is still grappling with major development challenges. It is in view of this that this study examines the impact of foreign finance on the economy, and whether FDI-climate interaction limits the potential impact of foreign direct investment (FDI) as an important component of foreign capital, on economic development in Ethiopia. The study further reveals the implications of post-cold war adoption of market-oriented policies in Ethiopia. The study uses autoregressive distributed lag (ARDL) model with data spanning from 1981 to 2020. It is found that FDI has positive and significant impact on economic development in the long run, but the positive effect is revealed to be insignificant in the short run. On the other hand, foreign debt is revealed to have long term negative though insignificant impact on economic development of the country. Furthermore, it is revealed that FDI-climate interaction has negative implication on the economy in both the long run and short run. Therefore, the effectiveness and efficiency of foreign finance on growth and development outcome in Ethiopia is conditional on whether it produces long run sustainable environmental outcome. Also, the adoption of neoliberal policies has not resulted in development of Ethiopia. Hence, the study recommends among others, the need for consideration of absorptive capacity of the country as a recipient economy and in its reforms, as well as the need for the government and development partners to ensure assessment of the long run potential environmental impact of foreign capital before they are deployed on the economy.
Authors and Affiliations
Muhammad Ali, Salam S. Mohammed, Kazeem O. Isah, Ozovehe Abdulsalami
Keywords
Related Articles
- EP ID EP750595
- DOI 10.47191/ijmra/v7-i11-03
- Views 52
- Downloads 0
Improve the Accounting Organization in Medical Equipment Business Enterprises in Nghe an Province, Vietnam
The article presents the theoretical basis of accounting work, requirements, and methods of organizing accounting work in commercial enterprises. Currently, the organization of accounting work in medical equipment tradin...
Exposure to Particulate Matter Affects Lung Function and Performance: A Literature Review
Air pollution has emerged as a significant peril to public health on a global scale, with around five million deaths occurring each year as a direct result of air pollution. The respiratory system mostly absorbs air cont...
Standardized and Modernized 12 Volts Mobile Electric Battery Charging Machine-An Implementation
In this research work, a standard and modernized 12 Volts battery charging machine was constructed and implemented. The materials used were locally sourced. The main objective centred at making the charger to protect the...
Analysis of the Influence of Distance Learning Through E-Learning and Digital Technology Literacy Ability on Student Learning Achievement with Self-Efficacy Mediation
This study aims to analyze the effect of distance learning through e-learning and digital technology literacy skills on student achievement by mediating self-efficacy. This study used explanatory research with a total sa...
Islamic Finance, Artificial Intelligence, and the Debt Embedded in the Ex Nihilo Monetary Creation System
The aim of this study is to shed light on a relationship that has not been explored until now. This is the relationship between the world of Islamic finance that of AI, and the debt embedded in the ex nihilo monetary cre...