The Effect of FDI inflow on the Agricultural productivity of Tanzania
Year: 2026
Type: article
Abstract: Tanzania, like most other developing countries, is known to be a recipient of investments from other countries, hence an assessment of the current state of FDI inflow is imperative for policy makers. Thus, this study investigates the relationship between foreign direct investment (FDI), GDP growth, inflation, and agricultural productivity in Tanzania from 1990 to 2023. Using time-series analysis and several statistical analytic methods, the research assesses how macroeconomic factors influence agricultural output. The results show significant economic change, with GDP increasing nearly thirteen fold, inflation stabilizing from hyperinflation to single digits, and agricultural productivity rising tenfold. While correlation analysis reveals strong positive links between GDP, FDI, and agricultural output (r = 0.995 and 0.754, respectively), regression results suggest that GDP has a statistically significant but economically small effect on agriculture, and FDI shows no substantial impact. Inflation consistently exhibits a negative correlation with all variables, emphasizing its negative role in economic performance. Co-integration tests confirm long-term equilibrium relationships, indicating that macroeconomic stability is vital for sustained agricultural growth. Despite the model’s high explanatory power (R² = 0.904), the near-zero coefficients for key variables highlight the need for further research including additional factors such as climate adaptation, technology adoption, and policy frameworks. The study concludes that while Tanzania has made notable progress in stabilizing its economy and attracting FDI, targeted policies are necessary to enhance FDI’s role in agricultural modernization and achieve sustainable sector growth.
Author: North American Academic Research
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W7224998856