The impact of the legal investment regime in Uganda in attracting and facilitating Foreign Direct Investment (FDI).

Abstract

By bridging the gap between domestic savings and investment and bringing the latest technology and management know-how from developed countries, foreign direct investment (FDI) can play important role in achieving rapid economic growth in the developing Uganda. The fact is that FDI mostly flows towards the developed countries and only a small portion of FDI flows to a limited number of developing countries. Thus, Uganda almost fails to attract a handsome amount of FDI. Using critical analysis of the Ugandan legal investment regime, this paper firstly assesses its ability to facilitate and attract FDI inflow the country and recommends on best available legal and policy incidental to the current dynamic nature of FDI. It is found that countries with more accommodative legal investment regimes enjoy high GDP growth rate and maintain business friendly environment with abundant modem infrastructural facilities, such as internet and can successfully attract FDI and FDI on the other hand, significantly affect economic growth of a country. This paper discusses the legal, business and economic environment for Foreign Direct Investment (FDI) in Uganda. It finds that despite recent improvements the FDI environment is still inadequate to attract high quality, efficiency-seeking, globalizing FDI; and that Uganda is lagging behind in the development of its competitive factors of production. It suggests a way forward - which includes improving the competitiveness of the investment climate; attracting FDI into existing areas of comparative advantage, such as extractive and other natural resource activities; developing regional networks and integration; and accelerating privatization.