The Impact of Manufacturing and Construction Sectors on Economic Growth in Tanzania: A Disaggregation Approach Analysis

Abstract

Manufacturing and construction sectors play important roles in economic growth in Tanzania. The present study aims to examine the impact of these sectors in economic growth. The study investigates the impact of manufacturing and construction sectors on economic growth in Tanzania using secondary data spanning from 1970 to 2020. The study employs Time series analysis particularly, bivariate regression analysis a disaggregation approach since all sectors were found to be highly collinear. Empirical results in unit root reveal that all variables are non-stationary at level and stationary at first difference. The integration using graphical presentation finds variables have long run relationship implying that manufacturing and construction sectors are moving together with gross domestic product as a proxy of economic growth in Tanzania. Further, the findings show that manufacturing and construction sectors have positive contributions to economic growth and it is statistically significant at five percent level of significance. Stability amongst the sectors on economic growth over the period of study was found to be unstable. Therefore, the empirical results shed light to the government on improving manufacturing and construction sectors by making some policy interventions in the respective sectors in order to bring stability in future. And this is possible since these sectors have a long run relationship as pointed out in cointegration results. Thus, improving manufacturing and construction sectors will boost the economic growth in Tanzania at large.