INSTITUTIONAL QUALITY AND ECONOMIC GROWTH IN TANZANIA

Gibogwe, Vincent and Nigo, Ayine and Kufuor, Karen (2022): INSTITUTIONAL QUALITY AND ECONOMIC GROWTH IN TANZANIA.

Abstract

In this paper, we use the ARDL method to find the Impact of institutional quality on economic growth in Tanzania from 1990 to 2021. The ARDL technique frees variables from residual correlation as all variables are assumed to be endogenous. They distinguish between dependent and explanatory variables in any long-run relationship, identify the co-integrating vectors with multiple co-integrating vectors, and derive the Error Correction Model (ECM) or Error Correction Model (ECM) Vector Error Correction Model (VECM) by integrating short-run adjustments with long-run equilibrium without losing extended-run information. Our results show all adjustment terms in the respective models that have a long-run relationship have correct (negative) signs and are more than one, implying there is convergence in the long run; that is, the models returned to their long-run equilibrium; the rate (or speed) at which this happened ranged between 15% to 106.6% annually. Institutional quality has a significant affirmative (0.047) causal long-run effect on economic growth.

• Item Type: MPRA Paper
• Language: English
• Keywords: institutional quality, economic growth, the rule of law, market liberalization
• Subjects: F - International Economics > F6 - Economic Impacts of Globalization > F63 - Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O19 - International Linkages to Development ; Role of International Organizations; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Empirical Studies of Economic Growth ; Aggregate Productivity ; Cross-Country Output Convergence; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O55 - Africa

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