Impact of Foreign Direct Investments on the Hospitality Sectors in Ethiopia

Abstract

Purpose: The study sought to analyze the impacts of foreign direct investments on the hospitality sectors in Ethiopia.

Methodology: The study adopted a desktop methodology. Desk research refers to secondary data or that which can be collected without fieldwork. Desk research is basically involved in collecting data from existing resources hence it is often considered a low cost technique as compared to field research, as the main cost is involved in executive’s time, telephone charges and directories. Thus, the study relied on already published studies, reports and statistics. This secondary data was easily accessed through the online journals and library.

Findings: The results show that showed that the success of the hospitality industry in developing countries depends on the levels of foreign direct investment. Although many developing countries have natural features such as beaches, rivers, and other natural resources, local capital to invest in those resources is unavailable. The tourism industry is one of the largest and fastest-growing sectors in the global economy and a key driver of socio-economic development, as it is labor-intensive and stimulates SME growth and investment. It has been used in other countries as an economic driver for growth which can widely support poverty reduction.

Unique Contribution to Theory, Practices and Policies: The capital market theory, investment development path theory and the eclectic theory may be used to anchor future studies in the tourism sector. The study results will also benefit other stakeholders such as the policy makers as well as researchers and scholars from different parts of the world. The top management of hospitality management companies in the country will also use the study findings to improve tourism performance in all their activities and programs. The study recommends that the adoption of effective social protection development policies in the tourism sector will help to improve efficiency in their major operations and activities.