Empirical Determinants of Foreign Direct Investment in Tanzania From 1980 - 2021.

Mabuba, Juma Miniph (2023) Empirical Determinants of Foreign Direct Investment in Tanzania From 1980 - 2021. Masters thesis, The Open University of Tanzania.

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Abstract

Foreign Direct Investment (FDI) is one amongst the foremost of the most prominent features of the global economy presently. This study conducts an empirical analysis of the determinants of Foreign Direct Investment in Tanzania. The data for this research was collected from World Investment Reports, IMF, World Bank, Tanzania Investment Centre (TIC), National Bureau of Statistics (NBS) and the Bank of Tanzania (BOT); the analysis was just based on time series data for the year 1980-2021. The findings revealed that influence of exchange rate volatilities to the FDI inflow proves that exchange rate and FDI the actual relationship is negative. Similarly, the findings on interest rate also demonstrate that in the short run an increase in the interest rate is related to a fall in the FDI inflow. Again in the long run relationship between the interest rate and the FDI inflow, finding revealed that the interest rate had a positive effect to the inflow of FDI. Lastly, the population growth was found to have a negative effect in the long run. Then again in the short run, the population growth had a negative effect in terms of the first difference. It was recommended that the government make more initiatives at administering the attraction of investors comparable to the neighboring economies and should be more sector-specific strategic investment promotion, advocacy for lower business costs so as to pump the urge to invest among foreign investors. Keywords: Foreign Direct Investment, Exchange rate, Interest rate, Population Growth.

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