Mfalamagoha, David S. M.
(2019)
The Relationship Between Institutional Factors and Foreign Direct Investment (FDI) Inflows in Tanzania.
["eprint_fieldopt_thesis_type_phd" not defined] thesis, The Open University of Tanzania.
Abstract
The aim of this study was to investigate the relationship between institutional factors and FDI inflows in Tanzania using time series annual data over the period 1996 to 2015. Multiple linear regression models, unit root test using Augmented Dickey Fuller test was employed to test whether each data in series had a unit root thereby testing the stationarity. Co integration test using Johansen co integration test was employed to test for co integration of variables, while Granger causality test was employed to test causality between the variables. It was revealed that regulatory quality, voice and accountability had significant positive influence on FDI inflows, while control of corruption had significant negative influence on FDI inflows. Rule of law and political stability had insignificant positive influence on FDI inflows, while government effectiveness had insignificant negative influence on FDI inflows. Access to land had insignificant positive influence on FDI inflows. Granger-Causality test revealed that political stability granger-caused FDI, implying that the direction of the relationship between the two variables was unidirectional. On the other hand corruption granger-caused FDI, implying that the direction of the relationship between the two variables was unidirectional. Based on empirical findings the study concluded that, over the period 1996-2015, voice and accountability and regulatory quality had significant positive influence on FDI inflows while control of corruption had significant negative influence on FDI inflows. Government effectiveness had insignificant negative influence on FDI inflows, political stability and rule of law had insignificant positive impact on FDI inflows. The study suggests that, measures should be adopted to combat corruption, in order to improve the investment climate for attracting FDI inflows in the country.
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