The role of foreign direct investment in the performance of cement industry in Tanzania

This study analyzes the role of Foreign Direct Investment to the performance of cement industry in Tanzania. The study uses a McIntyre’s Model to examine the underlying determinants of cement turnover in Tanzania. The study employs econometric analysis in which the error correction model (ECM) is applied to analyze cement turnover function. The empirical results indicate that real GDP in both short and long run estimation is a relevant variable for explaining the variations in the cement turnover in Tanzania where real inflation rate is a relevant variable in the short run estimation at lag one. There is a significance evidence that nominal exchange rate in Tanzania has a positive impact on the cement turnover in the short run at lag year. While FDI inflow and cement country total production variables both are significant showing positive signs at current period and in short run estimations. This study provides useful insights into cement industry performance in Tanzania. It suggests that policy makers have to rely much on policies that will increase cement productions and exports. The government should consider stabilizing power availability as well as improving infrastructures for transportation of raw materials. Furthermore, through efforts on attracting domestic investments, proper market infrastructures, sustainable flow of technology and appropriate market information could attract more investors in cement manufacturing sector.