Effects Of Inward Foreign Direct Investment On Economic Growth In Tanzania

This paper analyzed the effects of Inward FDI on economic growth in Tanzania,using Multiple Regression Model and Time series of data of the period(1995-2015)from International Organization;World Bank(World Bank Development Indicators).The results from statistical analysis showed that the Inflow FDI has positively significant effects on economic growth,and thus is consistence with the literatures in The Developing Countries and particularly Sub-Saharan African countries.Based on Multiple Regression Model,the effects of Inflow FDI to Tanzania Economic Growth are observed to be 0.337%,for every 1% increase in Net Inflow.According to the Econometric Model based on Multiple Regression,the result affirms that Inward FDI is considered the most important factor contributing in economic growth,followed by export and government spending.In fact,the fluctuation of the Foreign Direct Investment in Tanzania is mainly caused by five mainly common reasons;1).Weak of commodity prices: 2).Poor weather conditions: 3).the performance in oil and gas sector is not good: 4).Infrastructure is not good in terms of roads and communication.And finally: 5).the government policies are not favorable for investment sector.During the analysis,other variables showed that have also significant effects to the economic growth of the country.For instance,export has positive effects to economic growth of Tanzania with 1% significance level.The degree of variation shows that for every 1% increase in export,GDP Growth rate increases for 0.328 %.Also,government spending showed that has significant effects to economic Growth with 10% significance level.The degree of variation shows that for every 1% increase in government spending,GDP growth rate increases for 0.244%.These results show that FDI is a main source of exports and government spending to economic growthin Tanzania.