This paper assesses the role of foreign direct investment in economic growth by analyzing the contribution of sectoral external finance in Tanzania. Time series data from 1988 to 2017 and 1999 to 2017 for the general and sector‐specific foreign finance respectively is studied using time series econometrics techniques. More specifically, the autoregressive distributive lag bound test for cointegration and error correction model are employed to evaluate the impact of sector foreign direct investment on growth. The diagnostic tests suggest that our models are free from instability, nonnormality, misspecification, heteroscedasticity, and serial correlation. Estimated long‐ and short‐term coefficients show that the effect of the primary sector foreign direct investment is positive and statistically significant at the 10% and 5% significance levels, respectively. In contrast, that of the secondary and tertiary sectors is insignificant. The coefficient of the general foreign direct investment is found to be statistically insignificant. These results confirm that the type rather than the quantity of foreign direct investment may be more relevant in explaining economic growth. Other control variables exhibit their expected signs except that of openness to trade. Based on these findings, the study recommends more and strategic foreign direct investment incentives to the primary sector.

中文翻译：

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外国直接投资与经济增长。坦桑尼亚的部门外国直接投资分析

本文通过分析坦桑尼亚部门外部金融的贡献来评估外国直接投资在经济增长中的作用。使用时间序列计量经济学技术分别研究了1988年至2017年和1999年至2017年分别针对一般和特定部门的外国金融的时间序列数据。更具体地说，采用协整和误差校正模型的自回归分布滞后检验来评估部门外国直接投资对经济增长的影响。诊断测试表明我们的模型没有不稳定性，非正态性，错误指定，异方差和序列相关性。估计的长期和短期系数表明，第一产业的外国直接投资的影响是积极的，并且在显着性水平为10％和5％时具有统计意义，分别。相比之下，第二和第三产业的水平微不足道。发现一般外国直接投资的系数在统计上微不足道。这些结果证实，外国直接投资的类型而非数量可能在解释经济增长方面更相关。除贸易开放以外，其他控制变量均显示其预期迹象。基于这些发现，该研究建议对第一产业采取更多的战略性外国直接投资激励措施。这些结果证实，外国直接投资的类型而非数量可能在解释经济增长方面更相关。除贸易开放以外，其他控制变量均显示其预期迹象。基于这些发现，该研究建议对第一产业采取更多的战略性外国直接投资激励措施。这些结果证实，外国直接投资的类型而非数量可能在解释经济增长方面更相关。除贸易开放以外，其他控制变量均显示其预期迹象。基于这些发现，该研究建议对第一产业采取更多的战略性外国直接投资激励措施。