Determinants of Private Investment in Tanzania

Abstract

This article investigates the determinants of private investment in Tanzania using Error Correction Model and employing time series data for the period 1975 – 2010. The results show that public investment, GDP growth and credit to private sector are important in explaining growth of private investment but there is no enough evidence that interest rate, exchange rate and degree of openness of the economy have influence on growth of private investment. Policy implications on both fiscal and monetary sides are presented in line with the findings of this article.

Key words: Private investment, gross fixed capital formation, Tanzania Investment Centre, GDP growth, credit to private sector