The Effect of Resource Availability on Foreign Direct Investment. The Case of Kibaha District.

Abstract

The general objective of this study was to assess how resource availability affects foreign direct investment location decision in Tanzania. A case study research design was used whereby Kibaha district in Pwani region was used as the area of study and the researcher made use of both primary and secondary data. The Data was gathered from a total population of 39 registered companies operating in Kibaha district with at least two respondents taken from each company. A Correlation analysis and Regression analysis of variance was employed using the Statistical Package for the Social Sciences (IBM SPSS) statistical software to determine the relationship and the significance of the relationship between the independent variable and the dependent variable. Findings show there is a significant positive relationship between resource availability with FDI location decision. It was concluded that with regards to Kibaha district in particular, the benefits of ample availability of natural resources and geographical advantage are offset by problems with electricity and water supply hindering further investment from foreigners as it is rendering the place undesirable. Finally, the study recommends that to fully exploit the benefits of FDI the government needs to address the problems that have been identified as a hindrance to investors exploiting the availability of natural resources through investment in the area.