Ownership, location specific and internalization determinants and foreign direct investment inflows: a case study of selected foreign firms in Uganda
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Date
2018-08
Authors
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Kampala International University,College of Economics and Management
Abstract
This study was initiated to investigate the determinants of foreign direct investment inflows to
Uganda. The researcher was inspired to investigate the influences of foreign direct investment in
Uganda following an increase in foreign direct investments to Uganda. While foreign companies
investing in Uganda had grown from 52 in 1996 to 657 companies by 2014, and from a value of 160
in 1996 to 280 million dollars by 2014, representing an average growth rate of 50% per annum, the
growth rate over the same period in other East African countries was however significantly lower
than that of Uganda, yet they have similar environment. The researcher was thence desirous to find
out those factors that influence this significant increased foreign direct investment flow into
Uganda.
The study employed cross - sectional research design that used qualitative and quantitative methods
in data collection. The study involved systematic collection of data from key decision makers, who
identified those factors that led them into a decision to invest in Uganda, analyzing the collected
data, making conclusions and recommendations and citing areas for further research.
Analysis and interpretation of the findings revealed that ownership specific, location specific and
internalization significantly determined the amount of foreign direct investment inflow to Uganda,
at 0.334, 0.608 and 0.485 respectively. From the regression analysis, it is revealed that of the three
determinants, location specific factors significantly predict foreign direct investment inflow
decisions by 0.669. The combined coefficient for all the three variables (R Square) is 0.448. The
study therefore concludes that ownership specific, location specific and internalization determinants
significantly explain foreign direct investment inflows to Uganda.
The researcher makes a number of recommendations to enhance FDI investment that include: policy
makers should focus on location specific factors that create a competitive advantage for Uganda to
boost further foreign investment, policy makers should advocate for infrastructure development, and
the need to re-examine the investment policy to reduce on the number of unrealized licensed
projects
Description
A dissertation submitted to the College of Economics and Management in partial fulfillment of the Bachelor of International Business Administration Degree of Kampala International University
Keywords
Internalization, Ownership, Determinants, Direct, Foreign investments