This is a study that aims at evaluating the success of the Ethiopian investment policy mrnachieving its goals. Success in this study is measured in terms of the rate of execution ofrnaccredited investment projects and the resulting capital generated and jobs created. In this regardrnfacts reveal below average success. However the composition of foreign investment projectsrnwhich is dominated by the manufacturing sector is in line with the country's developmentrnprogram and can potentially allow the transfer of technology and managerial skills. ThernEthiopian investment climate is characterized by fluctuating capital inflow and employmentrncreation due to different social, political and economic factors that affect the operation of foreignrninvestment projects in the country.rnIn an attempt to make a practical examination of the effectiveness of the investment policy thernstudy has considered 3 foreign direct investment firms engaged in the three dominant sectors inrnwhich foreign investors are engaged namely agriculture, manufacturing, and construction. Therncore points of focus of the study in examining the effectiveness of the policy were issues relatedrnto technological transfer, employment generation, managerial skill development and ,salary andrnbenefits. In addition to these, the study has attempted to see the possible effects of the foreignrncompanies on local firms in encouraging business activities through creating backward andrnforward linkages. There was also an attempt to get a clear picture of the investment climate byrnincorporating views and facts from officials in the investment agency who are in charge ofrnlicensing promotion and following up of foreign investment ventures in Ethiopia.rnBased on the findings of the study, there has been a controversial outcome as far as the transferrnof appropriate technology is concerned, while the transfer of skills to employees as well asrnimprovement in salary and benefits has been encouraging, there is minimal success in attainingrnthe development of local businesses through linkages with the foreign companies as theyrnpurchase most of their inputs and sell most of their products in foreign markets resulting in arnweak backward and forward linkage with local firms.rnIn putting the pieces together Ethiopia hasn't done its homework to enjoy the fruits of foreignrndirect investment, making it necessary for every stakeholder to do their level best to change thernstory.