Economic Growth Benefits more from Population Health than Foreign Direct Investment: Evidence from Tanzania

Abstract

This paper uses annual secondary data for the period 1990-2019 to establish and compare the contributions of population life expectancy and foreign direct investment (FDI) on economic growth, controlled for inflation and exports of goods and services in Tanzania. It applies autoregressive distributed lag (ARDL) model as an estimation technique. The findings show that, FDI and export of goods and services have no significant impact on economic growth in the short run. Only life expectancy shows a positive and significant effect on economic growth in the short run. The long run findings show that FDI inflows have no significant impact on economic growth. However, population life expectancy and exports of goods and services all show positive and significant impact on economic growth in the long run. The magnitude of population life expectancy on economic growth is greater than that of FDI inflows or exports, meaning that economic growth benefits more from population health. We suggest the government to implement policies that improve population health such as expanding access to priority public health interventions (i.e. increase health facilities, better nutrition, medical care and other universal health coverage) to boost longevity, and with it, the economy. Overall, we conclude that investments in health should be prioritized because high levels of population health are associated with high levels of economic growth (i.e. income).