This study develops an analytical framework for investigating Government of Ugandaâ s support for Foreign Direct Investment (FDI) development paradigm. It compares macroeconomic and institutional incentives in attracting FDI and institutional weaknesses. This study also discusses the nature of FDI, benefits of FDI in terms of its spillovers, and strategic issues and policies for managing stakeholders in the economy. While Ugandan government maintains the view that improving on policy environment will attract FDI to address the countryâ s development challenges, this study found out that, progress in policy environment (fiscal incentives, political stability, and good regulation) does not automatically lead to changes in the hostâ s degree of attracting FDI unless it is aided by economic fundamentals like the availability of natural resources, market size and growth. Uganda has stagnated for the last 9 years with no improvement in terms of attracting more FDI. As shown in the finding, fiscal incentives influence FDI locational decisions in Uganda, but are not the most important factors however remain necessary evils to remedy poor microeconomic variables. In spite of governmentâ s success on achieving macro reforms to attract FDI, institutional weaknesses undermine its efforts. Foreign investors pay bribes to access public sector provided utilities. FDI relatively concentrates in one region which is inconsistent with a balanced development thesis. A move towards defining property rights causes unpopularity of FDI. Government always relies on a crisis strategy rather than a deliberate strategy to manage the different groups of stakeholders and other constraints in the economy. This studyâ s conclusion is that FDI alone is not a necessary condition for economic development unless it is complemented by host policies to increase the absorptive capacity of its spillovers.
MA in Economics
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(2007).Foreign direct investment and development objectives in the Republic of Uganda [Master’s thesis, the American University in Cairo]. AUC Knowledge Fountain.
Olanya, David. Foreign direct investment and development objectives in the Republic of Uganda. 2007. American University in Cairo, Master's thesis. AUC Knowledge Fountain.