Exploring the Relationship between GDP Per Capita, Government Expenditure, and Poverty Reduction in Tanzania

Abstract

The government of Tanzania has been actively
engaged in efforts to reduce poverty, yet the
challenge remains persistent. This study examined
the relationship between GDP per capita,
government expenditure (GCE), and poverty
reduction in the country. The main objective was
to analyze the trends and cointegration between
these variables in Tanzania. Utilizing a statistical
study design, this research employed time series
data covering the period from 1981 to 2017. The
findings revealed that while poverty has been
trending downwards, both GCE and GDP per
capita have shown upward trends. Moreover, the
analysis demonstrated a significant cointegration
between GDP per capita, GCE, and poverty
reduction, indicating that these variables are
interrelated in the long run. This implies that
government expenditure and economic growth are
crucial factors in the ongoing efforts to alleviate
poverty in Tanzania. Based on these insights, it is
recommended that the government increase
investment in education and health services to
further enhance GDP per capita growth.
Additionally, expanding infrastructure projects
can create employment opportunities, directly
impacting poverty reduction. Lastly, implementing
efficient fiscal policies that prioritize social
welfare spending will sustain and amplify the
positive trends in poverty alleviation