The Effect of Government Expenditure On Economic Growth Of Tanzania

Abstract

The main object of this study was to estimate the effect of government expenditure on economic growth of Tanzania for the period 2000-2018.In this study government expenditure has been divided into four sectors namely education, health, military, agriculture and economic growth has been represented by the Gross Domestic product (GDP) growth rate. The study used Auto Regression Distributive Lag (ARDL) technique to estimate the effects of government expenditure on the specified sectors for the last 19 years .The study used time series data during the period 2000-2018. The findings indicated that expenditure in education, health and agriculture are significant. Military expenditure was found out to be significant to economic growth. These findings may give some overview of policy implication to the Tanzania policymakers on optimizing the effect of government expenditure in economic growth .It is therefore recommended that, there is need for government to increase its budgetary allocation on education, health and agriculture and also place more emphasis on the capital expenditures so as to accelerate economic growth of Tanzania. Government should direct its expenditure towards the productive sectors like education as it would reduce the cost of doing business as well as raise the standard living of poor ones in the country.