Towards a sustainable flow of FDI to Tanzania: Does policy matter?

Despite of its efforts to build and maintain attractive predicable investment climate, Tanzania have been experiencing ups and downs in the trends of the Foreign Direct Investment inflows (FDI). Though the country is reported to be among the major FDI recipients in African region, still much have to be done policy-wise to enable the country overcome the situation and maintain a reasonable share of FDI inflows. Using time series data spanning from 1980-2016, the study tested the significance of the relationship. Infrastructural development, macroeconomic stability and availability of skilled labor were found to significantly determine the flow of FDI to Tanzania. Surprisingly, the level of country openness was found to have an insignificant effect on the inflow of FDI. Natural resources abundance and the size of the market were also found to significantly determine the flow of FDI. The findings of this study are primarily intended to assist Tanzanian policy makers in making reasonable decision when articulating policies aimed at attracting more FDI to the country.