Public expenditure composition and economic growth in Tanzania

This study analyses the relationship between government expenditure composition and economic growth in Tanzania. It covers a period of 45 years.This relationship is examined inthe long run and short run through the Error Correction Model (ECM). The empirical results show that private investment is very important in promoting economic growth of the country. Not as expected, human capital (health and education) expenditure decelerates the growth instead of accelerating it.Therefore the government may consider encouraging economic growth bycontrolling and reallocating the government expenditure (changing the composition) in order to restore fiscal discipline and control the size of its public deficit in the long term. Furthermore, the government may consider cutting public expenditure in unproductive expenditure and at the same time ensuring effective utilization of available resources to promote economic growth.