Foreign direct investments (FDIs) and national development : contribution of MTN to Uganda’s national economy

Abstract

The dominant literature indicates that foreign direct investment (FDI) is an important engine for promoting economic growth in developing economies. This study sought to understand this debate by asking a question. "Do foreign direct investments (FDIs) really benefit developing countries?" To interrogate this question, this study considered MTN Uganda Limited as one of the multinational corporations that operate in Uganda as one of the FDIs. To deeply understand how MTN as an FDI operates and contributes to Uganda’s economy, the study was further operationalized through three objectives. Specifically, the factors that determine FDI in developing economies, the benefits of FDI in developing economies, as well as the challenges and constraints affecting FDIs in host countries, these were investigated through the lens of neoliberal economic policy and deployed qualitative research methodologies such as key informant interviews, in-depth interviews, observations, and documentary reviews. The findings reveal that FDIs operate well in economies where there is a conducive policy environment that allows liberalization of the economy, political stability, good leadership, and political will in the country. It was also established that FDIs benefit developing countries through technological transfers, employment opportunities, and the generation of revenue through the transfer of taxes to host countries. Despite these benefits, the study established that much of the profits generated in Uganda are repatriated to multinational companies in the country of origin, while other companies tend to evade and avoid taxes. Based on these findings, it was concluded that FDIs such as MTN Uganda may benefit host countries, but this is dependent on the nature of the legal and policy frameworks in place to manage the way FDIs operate and ensure that profits generated equally benefit developing economies such as Uganda.