Effects Of Industrialization On Tanzania’s Economic Growth: A Case Of Manufacturing Sector

ABSTRACT

This study analyses the Effects of Industrialization on Tanzania’s Economic growth: A Case of Manufacturing Sector. Due to recently controversial literatures on manufacturing as an engine to economic growth or not, the study adapt a VAR model to examine the underlying effects of industrialization (manufacturing) on Tanzania economic growth from 1970 to 2017 period using yearly time series data by using the Granger Causality test and OLS method. The empirical results indicate that manufacturing, construction, water supply and electricity, agriculture and service sectors are all significant variables in explaining the variations in economic growth except for mining which resulted to be insignificant. Manufacturing sector contribution has revealed to be the sector with highest effect on economic growth and service sector contribution to be the least. The study suggests that, policy makers have to rely much on policies that will stimulate manufacturing growth. Government should consider stabilizing exchange rates and interest rates through monetary policies so as to reduce the cost of production to manufacturing activities.