Business & Management Studies

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 impact of Foreign Direct Investment on the economic growth of Tanzania. The data for this research was collected from World Investment Reports, IMF, World Bank, and the Bank of Tanzania (BOT); the analysis was just based on time series data for the year 1998-2018 From the research, the study found out that FDI has a notable contribution to the economic growth in Tanzania and the results show that the more FDI the more the economic growth. When FDI increases by 1 million USD, the GDP will be increased by 0.396519 million USD other factors remaining constant. This could simply imply that an increase in FDI inflows is important to economic growth. The study suggests that it is important for the government of Tanzania to review the investment policies that will facilitate FDI inflows to proceed with having a positive impact on the local economy in Tanzania. It is also very important for the government to focus on maintaining inflation at a low rate (at a single digit). Stability in the inflation rate is a significant factor in the economy, Tanzania needs to take into account all factors which cause an increase in the general price levels and address them with policies for it attracts more investors.