The empirical analysis on the long run relationship between higher education and economic growth in Tanzania

Abstract

Over the years economies have struggled to apply various theories that would lead to higher output in attempt to constantly improve standards of living. In this light, higher education has proven to do so with Sweden and Switzerland, among others, from its derived outcome of more productive and elite human capital. This Study investigates the empirical relationship between University enrolment, as a proxy to higher education, and economic growth in Tanzania, at the same time also, it examines other determinants of economic growth of Tanzania. Secondary data were sourced from The Basic Education Statistics of Tanzania, Central Bank of Tanzania (BOT), Ministry of Finance, National bureau of statistics (NBS), Scholarly and Economic journals, Ministry of Higher Education; and World Bank. The period of analysis was between the years 1980- 2010 using the ordinary least squares to estimate the model to ascertain the relationship between higher education and economic growth. Findings suggest that university enrolment’s in Tanzania contributes positively to economic growth. Other significant determinants of economic growth used include, exchange rate, inflation rate, form six enrolment rate and the degree of openness of the economy. In spite of the positive effect that university enrolments have on economic growth the study recommends a review in tactics that are employed in encouraging further enrolment in universities.