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Foreign direct investment (FDI) is an essential component of an open and effective international economic system, as well as a primary force of development. However, the benefits of FDI are not distributed automatically and fairly among countries, sectors, and local communities. The goal of this study was to investigate the role and advantages of FDI in Ethiopia. As a result, we used both primary and secondary data. The sample size for the primary data in the study was 384 respondents. The data was analyzed using descriptive and OLS regression model. As a result, the study found that technology, skill, and knowledge transfer to local employees in foreign firms in Ethiopia was limited because key technical positions were held by foreigner employees. Foreign corporations exhibit little charitable concern since there were no clear policy guidelines and minimal mobilization and coordination by local administrators. Besides, FDI had a positive and significant effect on employment growth. It means that FDI had benefits in terms of reducing unemployment problems, although the salary and incentive packages of foreign firms were not adequate for their local employees to live decent life.