Agriculture-led Industrialization for Inclusive Growth in Tanzania

Abstract

This study analyses the interdependence between industry and agriculture sectors forsocio-economic development and poverty reduction in Tanzania during the 1970–2018period. The study used the Autoregressive Distributed Lag (ARDL) bound testapproach and Granger causality test to uncover the relationship. The study found astable short-run and long-run relationships between agriculture and industrialsectors. Gross fixed capital formation and trade openness have significant short-runand long-run relationship with the growth of the industrial sector. While inflationaffect positively industrial growth in the short-run, its impact in the long-run isnegative. Moreover, there is a bi-directional causality between agriculture andindustrial sectors. Given the importance of agriculture to industrialisation andinclusive growth, the study recommends policies, strategies and further efforts toincrease agriculture productivity, output and income. The industrialization policy, asbroad as it may be, must build the nexus between the agriculture, manufacturing andother non-farm rural sectors. Equally important is the need to put in place a conduciveenvironment for promoting investment in both industry and agriculture sectors.JEL Classification: Q18; L16; I31.