Abstract
This research sought to explore the legal framework governing investment areas and incentives under the investment law of Ethiopia. In particular, the main emphasis of the research is to investigate whether the legal framework governing investment areas and incentives could be used for the promotion of investment and overall economic growth. The research employed doctrinal legal research approach and the investment law of the country were discussed in detail. The study found that the government publicized desire to facilitate the expansion of investment and stimulate the growth of the economy by opening up the investment areas for the private sector and providing incentives for potential investors, particularly to attract foreign investment. The researchers suggested that, if open admission is not allowed, residual reservation should be allowed and the government should not be included under the definition of domestic investors. So, the discrepancy against investment areas reserved for domestic investors should be avoided.
Highlights
There is no single and universally agreed definition for the term investment due to the evolving nature of economic relations, which in turn affects the connotation of the term1
Foreign nationals treated as domestic investors under current investment law are not allowed to invest in areas reserved for domestic investors since it only reserves the area to Ethiopian nationals
Though open admission approach for private investors is recommended as discussed earlier, investment areas exclusively reserved for the government, jointly allowed with the government, and investment areas not covered under the scope of investment proclamation are generally restricted for private investment
Summary
There is no single and universally agreed definition for the term investment due to the evolving nature of economic relations, which in turn affects the connotation of the term1 It is expressed in broad definition in most multilateral and bilateral investment treaties and trade agreements. Despite arguments for and against openness to investment, many countries changed their policy framework toward facilitation and openness It is expressed as objective of the legislation in different countries and international agreements with the view that it fosters economic growth and poverty alleviation. If an investment legislation provide openness to private investment, allow open admission approach to investment areas, use fiscal and non-fiscal incentives to promote and facilitate investment, it is highly attract more investments. It only includes exemption from income tax and exemption from customs duty
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