Does industrial sector performance influence Gross Domestic Product in Tanzania

Abstract

Tanzania's sustainable growth is strongly reliant on the relationship between industrial sector performance and GDP. The study looked at annual data from 2000 to 2019. The secondary data was analyzed using both descriptive and vector autoregressive approaches. The descriptive techniques used frequency tables, whilst the regression techniques included the stationary Augmented Dickey Fuller (ADF) evaluation, the Johansen Co-integration Test, and the Error Correction Model. The study also employed the Granger causality test to determine the direction of causality among the model variables. The ADF results show that while the variables are not stationary at the individual level, they are stationary at the first difference. The results of the Johansen co-integration reveal that there is a long-term relationship between industrial productivity indices (industrial exports, industrial value added, and production volume) and the GDP. In contrast, the VECM results reveal that the industrial productivity indicators (industrial value added, industrial exports, and production volume) have a long-term but minor impact on Tanzania's GDP. To summarize, Tanzania has completed significant growth in infrastructure rebuilding and the application of supportive strategies to stimulate the industrial sector, providing that the attractiveness of the industrial sector is regarded as a critical necessity for economic development because it causes creative economic development. Nevertheless, in order to attain long-term economic development, the study suggests that the industrial sector's institutional, legal, and fiscal climate be strengthened to boost its competitiveness.

Keywords: Industrial sector; Gross Domestic Product; Tanzania