| dc.description.abstract | Developing countries rely on foreign direct investment (FDI) to supplement their low levels of national savings in order to promote economic development. However, low levels of FDI are still a big concern for poor countries. Regional integration is often considered a means to improve member countries’ attractiveness to FDI. From the available anecdotal evidence, the East African region ranks as one of the poorest recipient of FDI in the world. This study sought to establish the relationships among economic integration, economic growth (GDP), ease of doing business and FDI in the East African Community (EAC). Specifically the study set out to find: the effect of economic integration on FDI; the moderating effect of GDP on the relationship between economic integration and FDI; the mediating effect of Ease of Doing Business on the relationship between economic integration and FDI; and the joint effect of economic integration, GDP, and ease of doing business on FDI. The research employed an explanatory research design. East African Community was the unit of analysis involving Kenya, Tanzania, Uganda, Rwanda and Burundi. Empirical data analysis used simple regression, multiple regression, hierarchical regression and path analysis. The quarterly time series data used spanned the period 2001 – 2015. The study established that formation of an economic bloc leads to more attraction of FDI into a region. The widening of market as a result of economic integration makes the region more attractive to potential foreign investors. However, it is also found that for more effective attraction of FDI there must be a conducive business environment (Ease of Doing Business) within the integrating region. Additionally, GDP is found to catalyze the rate of FDI attraction possibly because it is an indicator potential rate of return and population purchasing power. Among the key policy implications, it is recommended that, EAC should make concerted efforts to deepen the integration by taking measures that would further intensify intra-regional trade; that there is a need to improve investment climate, including having a business regulatory environment that is conducive for the modernization of the regional economy and attract FDI; More precisely there should be: reconciliation of the regional trade regime and border procedures within the EAC, lowering the transportation costs, scaling down on the effort, time, and funds businesses spend to conform with regulations, eradication of corruption, and safeguarding of property rights. | en_US |
