THE EFFECT OF INVESTMENT ON LOCAL ECONOMY: EVIDENCE FROM BENCH SHEKO, KAFFA, SHEKA, AND MAJANG ZONE

Abstract

The aim of this study is to empirically examine the effect of investment on the local economy in the Bench Sheko, Kaffa, Sheka, and Majang zone using both quantitative and qualitative research approaches. The qualitative research approach is used to assess the effect of investment on the local economy in terms of job opportunities, tax revenue, technology transfer, infrastructure provision, and value chain creation of investments operated in southwest Ethiopia by using interviews and questionnaires. The data were collected from 195 investments operated from Bench Sheko, Kaffa, Sheka, and Majang zone. The study found that all service, manufacturing, and agricultural investment sectors contribute more to the local economy by providing job opportunities, tax revenue, technology transfer, infrastructure provision, and value chain creation. Specifically, the study found that the agricultural investment sector transfers more technology to the local community than the service sector and manufacturing sector investment. In addition, agricultural sector investment creates more value chains than service and manufacturing investment sectors. Therefore, the study concluded that all investment sectors have a role in the local economy of the Bench Sheko, Kaffa, Sheka, and Majang zone. Thus, the Zone investment offices should create a conducive environment for investors to come and invest in the area.