The role of foreign direct investment in generating export capacity: the case of mining sector in Tanzania

The paper aim at examine the role of Foreign Direct Investment (FDI) in generating export capacity in Tanzania particularly at mining sector. This study used secondary data and data analysis was done by Ordinary Least Square (OLS) method to examine the contribution of FDI in mining to exports performance. The findings revealed that there is a positive relationship between Tanzania export performance and FDI in mining, GDP growth rate, exchange rate and export in mining, On the other hand, the study found out that there is negative relationship between total Tanzania export performance and inflation. The results indicate that FDIM (in mining) has no significance impact on determine export performance. In view of the findings there is a need to sustain current inflows and attract new FDI, but we can adjust this by enhancing also the domestic investments in mining sector. The mining sector could have brought positive impact on export performance and Tanzania would more likely derive benefit from FDI in mining if necessary measures like supply and demand side constrains could be addressed. There is a need to accelerate growth in the sector by the interventions in reviewing and implementation of Mining Policy by targeting at value addition and improve export performance; Facilitating exports of final products made of minerals rather than focusing on exporting raw gold, Tanzanite, diamond and other minerals.