Public investment in human capital and economic growth in Tanzania: an empirical investigation

This study examines the short- and long-run associations between public expenditure on education and health, inflation, and economic growth in Tanzania. Drawing on endogenous growth theory, it employs the Autoregressive Distributed Lag (ARDL) bounds-testing approach using data for 1990–2025. The bounds test confirms a relationship among real GDP, education expenditure, health expenditure, and inflation. Long-run estimates show that education expenditure is positively but insignificantly associated with real GDP, while health expenditure is negatively and marginally significantly associated at 10%. Inflation is negatively and significantly associated with real GDP, highlighting the importance of macroeconomic stability. Short-run results show, with education expenditure positive but insignificant, while health expenditure and inflation are negatively associated with real GDP. The error-correction coefficient is negative and significant, indicating that 69% of deviations from equilibrium are corrected within one year. Findings emphasize expenditure efficiency and quality, alongside macroeconomic stability. Results indicate conditional associations, not causal effects.