This book measures the impact of foreign direct investment (FDI) on economic growth in Ethiopia based on annual time series data over the period 1974 to 2011. It in particular examines how FDI affects GDP growth, both directly and also conditioning on trade liberalization that Ethiopia adopted in early 1990s. FDI affects economic growth of developing countries positively through transfer of capital, know-how, and technology. It increases activity not only in FDI beneficiary firms but also the effect can spread to other firms in the country and sectors through technology spillover, human and...