Empirical analysis of determinants of economic growth in Tanzania

This study attempted to assess the determinants of economic growth in Tanzania over the ۱۹۷۰ - ۲۰۲۰ period. By using Error Correction Model, both short-run and long-run determinants were estimated. Gross Domestic Product was treated as a dependent variable whereas; foreign direct investment, merchandised export, exchange rate, and inflation were independent variables. Augmented-Dickey Fuller test and the Zivot- Andrews test were applied with a view to analyzing the stationarity of each variable. After running the tests, it was observed that the variables were stationary. Empirical findings confirm that there was a long-run relationship but with a speed of adjustment of ۶۵ per cent. The findings show further that both exchange rate and inflation share similar effect on the country’s economic growth but with different levels of magnitude. Foreign direct investment has shown a positive long-run impact on economic growth. With respect to inflation, the negative effect of inflation to economic growth is tied to decades of higher levels of inflation that a country has experience in the past. Despite the current significant decline in the size of inflation to a single digit level to date, the overall effect of inflation over the period under review has not been influencing economic growth positively. To that effect, it is concluded that putting in place conducive environment that attracts more foreign direct investment should be at the center stage of development agenda of the country. Maintaining inflation to a single digit level is also recommended and called for.

کلیدواژه ها:

Economic Growth ، determinants ، Inflation ، Foreign direct investment ، Tanzania