Impact of foreign direct investment on agricultural economic growth in Tanzania: short- and long-run linkages modeling approach

This study examined the association between foreign direct investment (FDI) and agricultural economic growth in Tanzania, proxied by Agricultural Value Added (AVA) from 2000 to 2024. A time-series dataset was analyzed using descriptive statistics and the Autoregressive Distributed Lag (ARDL) model to assess both short-run and long-run relationships among AVA, FDI inflows, FDI outflows, exchange rate, GDP growth, and the agricultural labor force. Descriptive results indicate a general increase in AVA from approximately USD 6.7 billion in 2000 to USD 18.7 billion in 2024, alongside volatile FDI inflows and relatively low outward FDI. The ARDL bounds test confirms a long-run relationship among the variables, with the F-statistic exceeding the upper critical bound at the 5% level. Long-run results show that, at p < 0.05, FDI inflows, GDP growth, and agricultural labor are positively associated with AVA, while FDI outflows and exchange rate depreciation are negatively associated. The error correction term is negative and statistically significant, indicating adjustment toward the long-run equilibrium following short-run disturbances. Short-run dynamics are broadly consistent with the long-run associations. The findings suggest that agricultural performance in Tanzania is associated with investment inflows (capital inflows), labor availability, and macroeconomic conditions. Policy attention should focus on improving the investment climate, encouraging domestic reinvestment, and enhancing agricultural labor productivity.