An Empirical Analysis of Relationship between Population and Economic Growth in Tanzania for the Period spanning from 1980 to 2018
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The real GDP in Tanzania grows at an average rate of 6.6 percent for the period from 2000 to 2015 and continues to grow at an average of 7.0% and 7.1% in 2016 and 2017, respectively. This growth is accompanied by population growth whereby the statistics show that between 2002 and 2012, the population of Tanzanian increased by 30.4%, which is from 34,443,603 to 44,928,923 million. This parallel growth in economy and rapid population growth is of great research importance and poses a need, to examine their empirical relationship. This study was carried out on the data spanning for the period from 1980 to 2018 (39 years) to examine this relationship. Generally, the Vector Error Correction Model result indicates that there is long run relationship between population and economic growth while in short run there is a temporary impact. The findings of Granger causality analysis demonstrate that there is bidirectional causality between population growth and economic growth. This indicates that the population growth put pressure on economic growth and the other way round. Based on the findings, it is recommended that the government of Tanzania should focus on enabling working age population by channelling them to productive economic activities to fully contribute to the fast and high economic growth of the country.