Foreign direct investment (FDI) into Tanzania manufacturing sector for promotion of employment : A demystification

Abstract

Lately, the African Sub–Saharan nations have witnessed massive inflows of FDI, Tanzania inclusive. This calls for the need to evaluate the effect of the FDI on the economy of the recipient nations. A range of theoretical and empirical literature suggests various links through which FDI exert a positive impact on the economy of the recipient country, including the positive effect that FDI have on growth and employment creation. This paper used secondary data and time series data from 1990 to 2012 and argues that there exists a positive relationship between FDI inflow and Economic growth. This means that the FDI inflows in the industrial sector have a direct positive impact on economic growth in Tanzania. The study also confirms that there exists a positive relationship between FDI inflow in the manufacturing sector and employment creation.