DETERMINANTS OF FDI IN TANZANIA BASED ON GRAVITY MODEL RESULTS
DETERMINANTS OF FDI IN TANZANIA BASED ON GRAVITY MODEL RESULTS

Summary/Abstract: Research background: Foreign direct investment (FDI) is an important factor supporting the development of Tanzania's economy. Foreign capital in Tanzania is crucial primarily for the development of transport, telecommunications and energy infrastructure. The factors attracting foreign investors and the factors limiting the inflow of capital are not fully recognized, and research in this area requires updating. Purpose: Identification of factors favoring the inflow of FDI to Tanzania and factors that hinder this inflow. Research methodology: Gravity model for FDI in Tanzania estimated for panel data using FE and RE estimators. Results: Tanzania's GDP and imports stimulate the inflow of FDI, while exports and the distance between the host country and source country limit the inflow of FDI. The common border, common language and historical colonial ties between Tanzania and the investor countries did not significantly affect FDI in this country. Novelty: Updating research showing the impact of macroeconomic variables on the inflow of FDI to Tanzania using the gravity model, formulating current recommendations for decision-makers responsible for the country's economic development.

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