Effectiveness of foreign direct investment on employment in Tanzania: Multiple regression analysis

The study pursued to investigate the effectiveness of Foreign Direct Investmenton employment in Tanzania by using Multiple Regression Analysis shows that Foreign Direct Investments significant variable to predict reduction of unemployment in Tanzania given the modelunemp = 32.32015–1.092293fdi+ 0.2819779gdp+0.0805218infl +ε.Shapiro Wilk Test, heteroscedasticity and serial correlation were conducted for model validation. The findings reveal that Foreign Direct Investment is negative related with unemployment. Therefore, the increase and decrease of foreign direct investment will lead to the decrease and increase unemployment respectively. The variation of unemployment also can be influenced by foreign direct investment, gross domestic product and Inflation with 73.27% while the remaining percent 26.73% is not explained in the model, since the R2 is 73.27%. The government of Tanzania will have to reduce restrictions on Foreign Direct Investment by introducing transparent and dependable conditions for domestic and foreign firms. The infrastructure (such as transport and energy supply) which required for the quality investors should be improved. Tanzania should adopt monetary policy measures such as cutting interest rate (cost of borrowing) and tax relief in order to stimulate investment through Foreign Direct Investment.