Determinants of domestic private investment in manufacturing sector: the case study of gurahge zone.

Abstract

This research paper aims to investigate the determinants of domestic private investment (manufacturing sector) in the Gurage zone. Objective of the study was to examine the factors that affect private domestic investors in manufacturing sectors in the study area. To address these objectives, the researcher used descriptive statistics, and explanatory research design was employed and 347 sampled respondents were selected for the study. The researcher adopted a stratified sampling technique and applied Yamane formula for sample size determination. The data were collected through primary source (qualitative data approach) collected from investors and industrial managers in the manufacturing sector. Descriptive statics results were reported using tables, figures, charts, frequency, percentage, standard deviation, mean and econometric results were analyzed by using in multiple linear regression models by using SPSS 20 software package. The main finding of this study indicates that acquiring a bank loan, technological factors, administrative challenges, Locational factors, domestic market challenges, foreign mark challenges, High energy cost, break down of power, shortage of raw materials, and low working capitals and high financing cost. The econometric results also show that eight variables have a statistically significant and positive correlation for domestic private investment, and political instability risk have a statistically significant and negative correlation, and access to land is statistically insignificant variable in this study. The study concludes that domestic private investor in the study area were affected by the above identified factors. The researcher recommended for all concerned bodies, to pay more attention attracting foreign investors to invest in Gurage zone and constructs industry park in the study area, solve these problems acquiring a bank loan, technological factors, administrative challenges, locational factors, domestic market challenges, foreign mark challenges, high energy cost, break down of power, shortage of raw materials, and low working capitals and high financing cost.