Contribution of foreign direct investment towards the development of small and medium enterprises in Tanzania a case study of Dar es Salaam

The contribution of FDI toward SMEs development has been an issue of intense debate among academician for a long time, in developing countries like Tanzania very few studies have been undertaken to the contribution of FDI on SMEs development. Notably studies done in Tanzania are quantitative method of analysis which involves simultaneously economic models which based on testing the relationship between FDI and SMEs. The main objective of this study was to explore the role of FDI especially Multinational Companies i.e.(MNCs) in terms technological transfer, providing market opportunities increase competitive environment, human capital development towards SMEs development . However the study has focused on Dar es salaam City as a case study. Dar es Salaam was chosen due to the fact that it’s the largest commercial city in a country hence representative and on the basis of its geo-politic and economic position. The study is very important especially on this period of globalization and internationalization where the economy of the world countries are persuaded to be knowledge based. The overall study findings revealed that the contribution of FDI towards SME development is still low despite the increase of FDI companies especially MNCs in the country. In addition, the study analyse the extent of linkage between MNCs and SMEs which found to be low compared to the increase of MNCs, also its asses the readiness of FDI companies to integrate local people on global value chain. Lastly, the study ends up recommended for renewal of FDI policy so that MNCs could to interact more with local SMEs.