POLITICAL UPRISING AND FOREIGN DIRECT INVESTMENT IN ETHIOPIA: LEGAL PROTECTION AND COMPENSATION

Abstract

n the current globalized world, where every single action of one country or any international organization directly or indirectly; positively or negatively affects another country, FDI is considered to be one of engines of boosting economic development of both developed and developing countries in which Ethiopia is not an exception. There are different theories for and against the flow of FDI into the territory of the host country. Those which analyze in favor of it try to mention the positive effects of FDI while the opposite side criticizes the same on the ground that FDI doesn‘t play positive role in the affairs of the host country or it takes the minimal part. Sooner or later it is positively considered by the majority of academic persons and politicians. FDI is not indifferent to the domestic situations of the host country. There are different determinants which play either positively or negatively in the inflow of FDI. One of the determinants is the political environment of the recipient country. The more stable is the political situation of the host country the more likelihood of inflow of FDI will be. The holding of massive political demonstration, political violence and armed conflicts are some of features of political instability in the host country which put the host country in disadvantageous part regarding the inflow of FDI. The study is mainly devoted to be conducted due to the current political uprising which has begun mainly three years ago. Following the political uprising, several FDIs have suffered from damage. Though the response of the government, to repair the damage, is quicker, investors have welcomed it in hesitation alleging its insufficiency. There are also investors who have refused to receive the government‘s ‗financial support because of its disproportionality to their damage. The general objective sought to be achieved, in the study, is checking whether the country has tried its best to prevent or mitigate the occurrence of the damage and the response of investors on the ‗financial support‘ made by the government. To do so, the qualitative and non-doctrinal research methodology has been employed. The legal documents and other literature have been reviewed. Interview has also been conducted with the Ethiopian Investment Commission and three investors which have been selected from among the injured investments following the political uprising. The study has revealed that Ethiopian government has shown reluctance in implementing the country‘s obligation of according full protection and security. Therefore, it has come up with the recommendation that the Ethiopian government should give equal endeavor for putting the obligation into practice as that of its diligence to attract FDI.