Abstract:
Among the most striking characteristics of the global economy, today is Foreign Direct
Investment (FDI). The goal of this study was to assess the economic growth of Tanzania
through Foreign Direct Investment. Data obtained from the World Bank database, International
Monetary Fund, Bank of Tanzania and Bureau of Statistics of Tanzania for this research;
research based on time series data from 1998-2019. The data translated into a logarithmic form
and the unit root test of the data performed to ensure the stationarity. From the estimated
results, all factors encountered. Stationary, multicollinearity and heteroskedasticity not detected
in all variables. They were suggesting that the estimates are reliable and can, therefore, be
relevant. The results of the regression analysis revealed that the effects of Foreign Direct
Investment and population on economic growth (GDP) are positive, which means that FDI and
population contribute positively to Tanzania's economy. Results have shown that the exchange
rate, Inflation and real interest rates have a negative effect on the economic growth of
Tanzania, indicating that they are disadvantageous to the economic growth of Tanzania so that
must be regulated; however, Tanzania should aim to maintain a single-digit inflation rate
because increasing of Inflation is detrimental to the economy. The study suggested that
Tanzania's Government needed to review investment policies that would enable FDI inflows to
continue to have a positive impact on Tanzania's local economy. Focusing on keeping Inflation
at a low rate is also crucial for the Government. Inflation-rate stability is an essential factor for
the economy, and it is vital for Tanzania to take into account all the factors leading to a rise in
general price levels, and to deal with them through appropriate policies.
