“Investment, Its efficiency and Economic Growth: Trend, Prospect and Relationship in Ethiopia”

Abstract

The aim of this paper is to examine the trend, relationship and prospect of investment, incremental capital output-ration and economic growth in Ethiopia using time series data from 2000/2001 to 2014/15. The paper applied documentary and administrative report reviews to analyze the trends and prospects. And undertake the simple regression to see the relationship between investment and economic growth and incremental capital output ration and economic growth and multiple-regression to see the combined impact of investment and incremental capital output-ratio on economic growth. The movement of investment and economic growth expresses increasing trend for most of the years. Their prospect is also expected to be the same. Though for most of the period the investment is efficient, but currently it demonstrates increasing trend. The future trend is expected to be more efficient. The regression result reveals significant impact of investment and insignificant impact of incremental capital output-ratio on economic growth. The regression analysis also discloses investment and incremental capital output ration together have significant impact on output or economy.