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Abstract
This study aims to investigate the causal links among Foreign Direct Investment (FDI), domestic investment, financial development, telecommunication infrastructure, the quality of labor force, and economic growth using the time series data covering the period between 1990 and 2017 in Tanzania. The study employs the concept of Granger causality and the vector error correction model to identify whether there exists either a long-term or a short-term Granger causality among the variables of interest. The results from the Johansen co-integration test show that the variables move together in the long run. Granger causality results reveal a one-way causality running from telecommunication infrastructure to FDI as well as the quality of labor and financial development in the short-run. Furthermore, FDI and financial development are found to cause economic development. In the long run, the results indicate causality running from FDI, domestic investment, labor force, financial development, and telecommunication infrastructure to economic growth. The results pose some policy implications as follows: since labor force, FDI, financial development, domestic investment, and telecommunication infrastructure are found to be among the significant determinants of economic growth in the long run, it is advised that policies designed to improve these macroeconomic indicators should be encouraged and reinforced. Furthermore, the country needs to find coherent ways to attract more foreign investors, improve the quality of labor force, and encourage both public and domestic investment
Keywords
Foreign direct investment
Domestic investment
Telecommunication infrastructure
Granger causality
Economic development
Tanzania
Citation
Kivyiro, P. (2025), "Granger Causality Analysis Among Macroeconomic Variables in Tanzania", Journal of Innovation and Social Science Research, Volume 2 Issue 1
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