| dc.description.abstract | The last decade has witnessed dramatic decline in the levels of foreign direct investments
(FDI) flowing into the East African Community (EAC) region. In an attempt to explore the
key factors behind this poor performance of FDI, the study focused on the relative
importance of various economic variables among them nominal GDP, real GDP per capita
and real GDP growth rate.
The study also integrated soft variables such as the level of infrastructure development,
literacy levels and interest rates in assessing the attractiveness of the EAC countries to FDI
inflows.
The study adopted a panel data econometric methodology where a multi-country panel data
for the three EAC partner states; Kenya, Tanzania and Uganda for the period 1996 to 2005
were employed to explore factors responsible for influencing the decision of foreign
investors.
The results of the study reveal that per capita income, level of infrastructure development,
availability of adequate human capital and GDP growth rate levels are significant and
important decision parameters in choosing whether or not to locate an investment in a
particular country. The findings also show wide disparity in FDI policies across the three
countries.
The study therefore recommends that the three countries step up efforts of encouraging
improvement in the levels of the identified parameters in order to boost their attractiveness to
FDI inflows. Improvement in other aspects of the investment climate should also be pursued
in order to realize a robust growth and sensitive increase in FDI inflows to the region. To
achieve the same, the three countries also need to harmonize their investment policies.
Accordingly, the results and discussions of the study have been organized in five chapters.
Chapter 1 discusses the conceptual framework, significance of the study, the problem of the
study, the scope and the purpose of the investigation. It also contains the hypotheses and
research questions.
Chapter 2 which focuses on review of literature pertaining to FDI highlights the types and
motivations of FDI, theories of FDI, traditional and current determinants of FDI and the
existing empirical studies.
Chapter 3 presents the methodology adopted. It includes the theoretical framework,
specification of the model, data types and sources and expected signs of the coefficients.
Chapter 4, on results, lays out the summary statistics, correlation results and regression
results. The study's conclusions and recommendations are presented in Chapter 6. The paper
ends with an outline of a bibliography and list of appendices. | en |
