Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/273952 
Year of Publication: 
2022
Series/Report no.: 
WIDER Working Paper No. 2022/155
Publisher: 
The United Nations University World Institute for Development Economics Research (UNU-WIDER), Helsinki
Abstract: 
In a bid to realize its development aspirations, Tanzania has made concerted efforts to increase public investment, particularly in the last decade. A significant proportion of these investments are financed by contracting debt, manifested by the rapid accumulation of public debt, especially external debt, with a notable rise in debt-servicing obligations. In view of these developments, this study sought to investigate the relationship between public debt and investment in Tanzania. The empirical analysis was conducted using the autoregressive distributed lag estimation approach based on data for the period 1976-2020. The results show that an increase in external debt has a positive impact of boosting public investment. However, the lagged effect of external debt accumulation is negative in the long run. Arguably, this could be attributable to the need to service and repay the debt which, depending on the cost of debt servicing, limits the net resources available for additional investment. Thus, it is of essence to ensure optimal use of resources by prioritizing and enhancing efficiency of public investment. Additionally, other avenues of funding such as public-private partnerships and financial market development could be explored to reduce dependence on external debt.
Subjects: 
public investment
Tanzania
public debt
JEL: 
E20
E22
H60
H63
Persistent Identifier of the first edition: 
ISBN: 
978-92-9267-288-1
Document Type: 
Working Paper

Files in This Item:
File
Size
413.96 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.