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The main objective of the study was to explore the impact of Foreign Direct
Investment on economic growth of Tanzania. Specifically the study was intended to
ascertain the extent at which FDI inflows in Mining and Quarrying sector,
manufacturing sector and Agriculture and Livestock sector influence economic
growth in Tanzania. The significance of the study was built upon the need to
understand if the sector matters in FDI impacts concerns. The study was to add value
in the available contradicting empirical findings of the same. Time series data from
1998 to 2013 were used in multiple linear regression using the ordinary least squire
(OLS) method.
The findings show that Foreign Direct Investment in the studied sectors of Mining
and Quarrying has a positive significant impact on economic growth while
Manufacturing and Agricultural sector have positive but insignificant impact on
Economic growth of Tanzania. Unlike the manufacturing sector, a comparatively
lesser FDI inflow in the Agricultural sector could be the reason for insignificant
effect.
The implication is that for the hosting country to benefit from FDI the hosting
country needs to have FDI-specific policies. Such a policy would state clearly about
the contract both parties are about to enter in consideration of issues like the types of
FDIs to be attracted, how to attract including reasonable incentives, what the country
should gain in terms of added value for each specific FDI that is attracted and how to
sustain the potential and actual FDI benefits. |
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