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Assessing The Causal Relationship Among Foreign Direct Investment, Trade, Economic Growth And Domestic Investment In Tanzania  


Abstract Category: Accounts and Economics
Course / Degree: MSc Economics
Institution / University: Mzumbe Universirty, Tanzania
Published in: 2014


Dissertation Abstract / Summary:

The study examines the causal relationship among foreign direct investment, trade, economic growth, and domestic investment in Tanzania using annual time series data from 1970 to 2012. Before embarking on the econometrics, we tested the data series for stationarity using the unit root tests. The tests results revealed that the variables were not stationary at their levels, but when they were differenced once they became stationary and integrated of order one I(1). The cointegration test results revealed two cointegrating vectors in the system which implied that the variables have long run equilibrium relationships. The presence of long run relationship between the variables implied that Granger causality test was to be performed within vector correction modelling. The results for this test revealed strong support for the FDI-led exports, export-driven FDI, growth-driven FDI, export-led growth, growth-driven exports hypotheses for Tanzania. It was further revealed that domestic investment Granger-causes economic growth of Tanzania suggesting that policies should be directed to motivating domestic investment. In general, the study reveals that policies promoting exports have been successful in accelerating growth. However, policies designed to attract more FDI should be accompanied by another package of policies to strengthen the absorptive capacity of the country so that the impacts of FDI are manifested in the country’s economic growth.


Dissertation Keywords/Search Tags:
Foreign direct investment, economic growth, cointegration, vector error correction model and Tanzania

This Dissertation Abstract may be cited as follows:
Paul, F. (2014). Assessing the Causal Relationship among Foreign Direct Investment, Trade, Economic Growth and Domestic Investment in Tanzania. Master's Dissertation. Mzumbe University


Submission Details: Dissertation Abstract submitted by Fintan Paul from Tanzania on 16-Feb-2016 08:55.
Abstract has been viewed 1082 times (since 7 Mar 2010).

Fintan Paul Contact Details: Email: fintan.paul@udom.ac.tz Phone: +255788004131



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