Foreign direct investment is one of the most striking features of the global economyrntoday. Understanding this, the government of Ethiopia had issued several investmentrnincentives to encourage the inflows of foreign direct investment. Thus, this study hasrnattempted to identifY and investigate the socia-economic impacts of foreign directrninvestment inflows to Bishoflu town.rnTo achieve this objective primary and secondary data were collected which isrnquantitative and qualitative in nature. To obtain this data, questionnaire, FGD and KIIrnwas employed where as to collect secondary documented data from different institutions.rnThe main source of data for the study was employees working in selected six (6) foreignrnfirms. The study also employed both probability and non probability samplingrntechniques. Probability sampling techniques has been used to select respondents from allrnworkers who have been working in selected foreign firms. Purposive sampling methodrnwas also employed to collect data from focus group discussants and interviewees whichrnwere mainly used to triangulate data collected through questionnaire.rnThe result of the study showed that the inflows of Foreign Direct Investment in to thernarea have potential Socia-economic contributions and Socia-economic problems. Theserncontributions are job creation, technology transfer, income generation, increasing savingrnlevels of employees, providing of social and economic infrastructure. The problems arernfailure of the firms to fill the skill gap of employees in use of technology, the farmingrncomfinmity loss productive asset, environmental pollution, distraction social institutionrnand unwise use of investment land.rnBased on the major finding of the thesis, recommendations were forwarded that couldrnsolve the problems. In this regard, improving the skill gap of employees, providingrncomprehensive approach that enable community to diversifo sources of income, creatingrnawareness, providing technical support for local community and strengthening follow uprnand after care services are the area that needs emphasis by concerned Regional andrnlocal bodies to solve these problems.rnKey words: Foreign direct investment and Socio-economic impacts