An empirical investigation of the determinants of foreign direct investment in Tanzania the period 1970 – 2007

This study attempted to empirically analyse the performance and determinants of Foreign Direct Investment (FDI) in Tanzania over the period 1970-2007. Most African countries have recently liberalized trade and have also attempted to create enabling environment for foreign direct investment. Tanzania, like many African counties, took some steps towards liberalizing it trade and macroeconomic policies so as to attract FDI and establishes the determining factors of FDI in Tanzania. The results obtained show that natural resources availability, have positive impact on FDI while corruption, corporate tax, inflation and exchange rates have negative impact on FDI as would be expected. Openness is found to be inconclusive, while per capita income was found to be insignificant. These results imply that in order to attract more FDI to Tanzania, further improvements on macroeconomic policies is needed together with putting in place stern measures against corruption.