An empirical analysis of the relationship between FDI and economic growth in Tanzania

This study examines causal relationship between foreign direct investment (FDI) inflows and economic growth in Tanzania during 1990–2020. As financial development trade were not incorporated extant studies, we included them as intermediate variables because of their intermediation role this study. FDI inflow is considered an important catalyst developing economies. Neoclassical theories claim that it enhances by augmenting capital stock technology. According to the neoclassical theories, does enhance long-run rate but instead related level output. However, empirical evidence rather mixed, with some supporting theoretical views on growth, while others opposing them. We employ autoregressive distributed lag model Granger causality tests analyze relationship. The results indicate there exists a among under considerations Tanzania. Furthermore, finding reveals positive statistically significant unidirectional running from long short run. Hence, conclude should emphasize FDI-led policies realize desired objectives.