Importance of foreign direct investment in Tanzania: A
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Date
2011-10
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Kampala International University, College of Economics and Management
Abstract
Small island states generally refer to states with a geographic area of less than 1,000 square
kilometers and a total population of less than one million. These characteristics can be seen to
directly affect the role of foreign direct investment (FDI) within the states. Firstly, small
island states may have a nan·ow economic base because of the limited range of resources. As
such, it is common for small island states to develop abundant resources making the economy
revolve around only a limited number of economic sectors such as tourism or financial
services. Secondly and conversely they may instead develop strong economic dependence on
a larger economy to gain markets as well as obtain investments. As a result of these
characteristics, small island states may thus greatly depend on FDI to keep the economy
afloat.
Developing Small Island states experience great problems. They must often manage limited
resources, depend on other states, manage vulnerabilities of economic sectors, and develop
effective economic and socio-political infrastructures. Whilst there is a general recognition
as to the importance of FDI to small island states, each small island state is differently
endowed, and has different historical developments and systems so that to understand the
relationship fully, there is a need to consider the significance of FDI based on the specific
context of each particular small island state.
This study therefore considers the imp01iance of FDI in the context of the Zanzibar a
developing small island state near mainland Africa, to explore the role and impact of FDI on
such states. This paper analyses the strength and vulnerabilities, how the Zanzibar obtain
FDI, what effects does it have and its overall importance. The methodological framework
follows the research onion model by Saunders, Lewis & Thornhill (2003). The research
utilizes case study and the PESTLE analysis technique as the investigative strategy. The
method of collecting data is desk or secondary research. This pertains to the concurrent
processes of collecting, integrating, classifying, interpreting and analyzing data from
secondary sources. The benefits and the adverse effects are analyzed in order to determine
their effect and if such an effect will lead to economic growth and prosperity.
Description
research proposal submitted to the college of economics and management science in partial fulfillment of the requirements for the a ward of Bachelor’s Degree in international business administration of Kampala International University
Keywords
Foreign direct investment, Tanzania, Zanzibar