Abstract
Corruption remains a prominent institutional barrier that hampers foreign direct investment (FDI) inflow in developing countries. However, the specific impact of corruption on FDI inflows in Tanzania remains largely unexplored. This research aims to contribute to the existing body of knowledge by examining the consequences of corruption on FDI inflows in Tanzania between 1996 and 2021. The analysis utilizes time series institutional data obtained from the World Bank governance indicators and FDI inflow data from the Bank of Tanzania (BOT). Given the consideration of multiple variables, a multiple regression model is employed to analyze the data. Unit root tests such as the expanded Dickey-Fuller and Johansen cointegration tests are utilised to assess whether the variables are cointegrated and whether the data exhibits stationarity or nonstationarity. The findings of this study unequivocally demonstrate that corruption (CC) has a significant adverse effect on both short-term and long-term FDI inflows. The data from 1996 to 2021 consistently indicate a noteworthy influence of corruption (CC) on FDI inflows. Consequently, this research recommends concerted efforts to combat corruption in order to improve the investment climate and attract foreign investors.
Publisher
Center for Strategic Studies in Business and Finance SSBFNET
Subject
General Earth and Planetary Sciences,General Environmental Science
Reference63 articles.
1. Adeleke, I. M. (2014). FDI growth Nexus in Africa: Does Governance matter? Journal of Economic Development, 39(1).
2. Alam, Q., Mian, M. E. U., & Smith, R. F. I. (2005). The impact of poor governance on FDI: The Bangladesh Experience. Network of Asia-Pacific Schools and Institutions.
3. Alemu, A. M. (2012). Effects of Corruption on FDI Inflow in Asian Economies. Seoul Journal of Economics, 25(4), 387-412.
4. Almfraji, A. M and M. K. Almsafir (2014). Foreign direct investment and economic growth literature review from 1994 to 2012. Procedia-Social and Behvioral Sciences 129: 206–13.
5. Al-Sadig, A. (2009). The effects of Corruption on FDI Inflows. Cato Journal, 29(2), 267-294.