Effect of Macroeconomic Factors on Foreign Direct Investment in Zanzibar

Omar, Farhat A. (2023) Effect of Macroeconomic Factors on Foreign Direct Investment in Zanzibar. Masters thesis, The Open University of Tanzania.

HTML - Submitted Version Download (124kB)

Abstract

The study looks at how macroeconomic factors affect foreign direct investment (FDI) in Zanzibar. In this study, the independent variables are Gross Domestic Product, Inflation Rate, Interest Rate, and Foreign Exchange Rate, and the dependent variable is Foreign Direct Investment Inflows. The Quantitative research approach data required for this study was gathered through time series design which secondary data were collected, data that are mainly available in Zanzibar Investment Promotion Authority (ZIPA) Reports, the National Bureau of Statistics Tanzania (NBS) website, the Ministry of Finance Zanzibar, and the Bank of Tanzania (B.O.T).This research uses 10 years of data every quarter with a sample size of 38 quarterly periods. This study uses a descriptive research design, The data was processed using E-view program. In order to attain the four objectives of the study on which the results obtained were presented and discussions were made. using VECM model and the findings show that FOREX and Domestic Gross product have a positive insignificant impact on the level FDI while IFR and ITR have negative impact to FDI. The variables on this study were found to be insignificant factors causing the variability of FDI flows though the GDP and INF, have the expected signs, ITR with an unexpected sign. Finally, we accept the null hypothesis that; high interstate has no effect on FDI flow in Zanzibar. The results show that, in both the long and short run, macroeconomic factors have significant but positive and negative impacts on foreign direct investment different from the expectations. The government should strengthen the reforms in the investment sector which can attract investors and improve the efficiency of all production activities in the country.

Actions (login required)

View Item