Most leading economic countries have strong metal and engineering industries. However, the contribution of the basic metal and engineering industries in Ethiopia to the overall economy is minimal. This indicates that there is a great need from this industry if it has to position itself to a level where it can be a real contributor to the economy. The metal products account the highest value of the total import in the country. Ethiopia has advantages of low labor cost and abundant natural resource. These resources can be advantageous to be competitive to the global market if technological capability is built. Since the country suffers a shortage of foreign currency, currently there is an emphasis to substitute the imports of metal and engineering products manufacturing locally for the coming 5 years. Substituting the spare parts, equipment and machinery imported from abroad through reverse engineering is a significant and prior action to be taken. Therefore, reverse engineering is the most important tool for building technological capabilities in the country. The prior action has to be the metal and engineering industries through technological building and technology transfer.

The basic metal and engineering industry is crucial to the development of any modern economy and is considered to be the backbone of human civilization. The Ethiopian basic metal and engineering industries lack the crucial component of producing basic metals from iron ore or other process route and are still in the infancy stage over the years. However, it's essential for the sector to transfer technology from foreign firms which play a major role in the current endeavor in Ethiopia to bring rapid and sustainable development of the sector. The contribution of FDI to the economy of one country will be effective if and only if there is a local capability to absorb the technology owned by the foreign company to other similar industries which potentially dictates a large scale participation of local personnel's in the FDI companies at a critical level. Though the number of foreign investors currently destined to our country might not be small, but there is less technological flow from foreign investors. This book concentrates on the role of FDI on technology transfer to basic metal and engineering industries to validate the methodology and to demonstrate the result of the study.