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Performance of domestic investment in Tanzania: an empirical analysis over the 1980-2020 period
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Abstract
Although domestic investment is a key component of economic growth, its growth has been insignificant in recent years. This study employs an error correction model to analyze the factors affecting domestic investment in Tanzania using time-series data recorded in the 1980-2020 period. These factors include money supply, interest rate, savings rate, and government expenditure. The regression results show that the effect of government expenditure on economic growth is insignificant while money supply, interest rate, and savings rate have a significant impact on economic growth. These findings imply that policies regulating interest rates, savings rates, and money supply are necessary to accelerate financial intermediation and mobilize domestic savings, thereby improving domestic investment. Furthermore, this study recommends encouraging investment incentives and establishing vibrant investment promotion agencies.
Article Details
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Keywords
Domestic investment, Domestic saving, Economic growth, Government expenditure
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