Impact of Public External Debt and Trade Openness on the Employment Growth in Tanzania: 1990- 2022, An ARDL Model

Public External Debt and Trade Openness can have significant impact on employment growth.This paper examined the impact of public external debt and trade openness on employment growth, using time series data from 1990 to 2022 obtained from the Bank of Tanzania and the World Bank.Stationarity tests, co-integration bound tests, and the ARDL Error Correction Model were employed for analysis.The results indicated that, in the long run, trade openness ( = -0.002,p = 0.836), external debt ( = -0.024,p = 0.030), and foreign reserves ( = -0.028,p = 0.009) have a negative impact on employment growth.Conversely, GDP growth ( = 0.04, p = 0.026), external debt servicing ( = 0.019, p = 0.032), and foreign direct investment (FDI) ( = 0.003, p = 0.419) contribute positively.The study concludes that both trade openness and external debt can impede employment growth if not managed judiciously.It recommends revising trade tariffs and policies to bolster local participation in international trade, as well as improving borrowing conditions to ensure that external debt is directed towards productive investments in the agriculture and manufacturing sectors.Furthermore, it is advisable to shorten external debt servicing frameworks to facilitate faster debt repayment and create additional employment opportunities.