A Comparative Study of Harmonization of Foreign Direct Investment Policies in the East African Community Between 1985 and 2010
Abstract
Foreign direct investment inflows have rapidly increased worldwidq over the years. Economies have recognized that FDI is an important catalyst for economic development and have therefore improved their business climate to attract more FDI and Africa is not an exception. African countries have moved to liberalize the investment environment, yet have not received much FDI. However, despite the effort made by African countries to attract FDI, the inflow to the region compared to other developing economies is still low. Part of this is mainly due to marginalization of financial globalization, and skepticism toward foreign investment, owing to, ideological, historical, and political reasons.
A crucial question is to whether the impact of FDI on recipient countries, especially the developing ones and some of the main channels through which the impact could be realized. Developing countries, by not attracting further FDI, are therefore failing to fully benefit from the potential of foreign capital to contribute to economic development and integration within the global economy. FDI inflows vary from country to country as well as from region to region. This has mainly been attributed to differences in both country and regional policies, especially for regional blocks. It is against this backdrop that this study examines the FDI policies adopted by TIle East African Community as a region and scrutinizes the effects of harmonization of the policies. Surveys in the region suggest that there are important positive effects from FDI for all the members of the community.
Publisher
University of Nairobi, Kenya