The Impact of External Debt and Foreign Direct Investment on Economic Growth: Empirical Evidence from Tanzania

Moga Tano Jilenga, Helian Xu and Igor-Mathieu Gondje-Dacka

International Journal of Financial Research, 2016, vol. 7, issue 2, 154-162

Abstract: This study investigates the impact of external debt and Foreign direct investment (FDI) on economic growth in Tanzania using time series data from 1971-2011. The empirical analysis was based on ARDL model and the Bounds test approach of co-integration as advocated by Pesaran et al (2001) to test for long-run equilibrium relationship. The results show that, in the long-run debt promote economic growth in Tanzania. However, foreign direct investment exhibits a negative impact on economic growth. While in the short-run, the results indicate that there is no directional causality either between external debts (PD) and economic growth (RGDP) or between FDI_INFL and economic growth (RGDP).

Keywords: external debt; FDI; economic growth; ARDL; co-integration; Tanzania (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:jfr:ijfr11:v:7:y:2016:i:2:p:154-162

DOI: 10.5430/ijfr.v7n2p154

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