The Impact of Investment Climate Constraints on Manufacturing Industry Performance: The Case of Dire Dawa City, Eastern Ethiopia

Abstract

Manufacturing industry significantly has a positive effect on economic transformation through creating employment, poverty reduction, reducing regional disparities, and export product diversification. The study analyzed the investment climate constraints on manufacturing industry in Dire Dawa City, Eastern Ethiopia. The study used primary and secondary data sources. These include questionnaires, interview, and observation. The secondary data also gathered from published and unpublished sources. The target populations were operational manufacturing firms found in the study area. Out of 67 manufacturing firms, 57(85%) of firms were taken as a sample using census study. These 57 firms selected using stratified and systematic probability sampling techniques. Different government officials and participants of in-depth interviewee were selected using purposive sampling. The data analyzed using descriptive statistics. The study has found that financial factors, institutional factors, infrastructure, social, economic, environmental, political factors, raw material availability and capacity utilization severely influencing the manufacturing industry in the study area. Thus, a good investment climate requires reaching and attaining the right economic growth and transformation. The city government should change the existing organizational structure to encourage the manufacturers and also to speed up industrialization.