Causality Relationship between Foreign Direct Investment, GDP Growth and Export for Tanzania

  •  Moses Shawa    
  •  Yao Shen    


Deep analysis on how foreign direct investment (FDI) interacts with the host country’s GDP growth and export is very important for the identification of the strategies that will enable a developing country like Tanzania to achieve its development objectives. Hence we continue to analyze the causality relationship between FDI, Export and GDP growth of Tanzania for about 33 years starting from the year 1980 to 2012.In this study the co integration and granger causality test analysis is conducted. The co integration test reveals that there is existence of a long run association ship among the variables in questions. While the granger causality results suggests that there is a causality relationship which is unidirectional running from FDI to export and no causality was discovered between FDI and GDP growth suggesting that FDI is a good predictor of export and hence FDI led export growth for Tanzania might be necessary for the country to boost export.

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