FDI In Human Development
The relation between economic growth and human development has been a theme of rigorous empirical econometric work since the 1970s. Foreign Direct Investment (FDI), which is a key component of human development, mainly in modern regional and global economies, has been found to explain varying levels of return and economic growth.
Due to that it is difficult for countries to generate capital by basing on their domestic capacities and strengths and domestic saving alone, hence made FDI as a major source of capital for developed and developing countries. FDI does not only bring about the introduction of new technology, it also contributes to the general growth of a country’s economy.
Clearly FDI is an integral part of an effective and open
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Furthermore, the relative importance of FDI motives may change over time, for instance, due to globalization. Factors that have been brought out as motives of FDI in developing countries include political and macroeconomic stability, infrastructure quality, governance, regulatory environment， openness to trade and investment promotion strategies (UNCTAD, 1998). However, it is important to note that even though these factors have been empirically proven to be FDI motives, some motives may apply to some regions but not others. For instance, on average, countries in Sub-Sahara Africa (SSA) receive less FDI than other regions by virtue of their geographical location (Asiedu, 2002). However, it is important to note that even when factors apply to a particular region, they may not be applicable to a specific country within that …show more content…
To propose policies, which could be implemented by the government to attract more FDI.
1.5 Significance of the Study
Given the immense benefits that the country can get from FDI inflows, this study aimed to investigate the motives of foreign direct investment, mainly in Tanzania because in this century, FDI is increasingly becoming an important economic and development tool globally and many poor countries, including Tanzania are trying much to set attractive environment to attract more FDIs in order to receive potential positive impacts that accompany such investment schemes.
Moreover, FDI is the fueling element for any developing nation in terms of Investment and Finance portfolios. Every country for their growth would require available funds and investment to flow into the country. Since FDI is becoming an important tool for inflow of investment for a country, therefore, it is better to identify the potential economic sectors that can lead to rapid economic transformation and stability by directing the reasonable and adequate amount of investment funds especially that comes in the form of
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