Exploring the Relationship between GDP Per Capita, Government Expenditure, and Poverty Reduction in Tanzania

Abstract

The government of Tanzania has been actively engaged in efforts to reduce poverty, yet the challenge remains persistent. This study examined the relationship between GDP per capita, government expenditure (GCE), and poverty reduction in the country. The main objective was to analyze the trends and cointegration between these variables in Tanzania. Utilizing a statistical study design, this research employed time series data covering the period from 1981 to 2017. The findings revealed that while poverty has been trending downwards, both GCE and GDP per capita have shown upward trends. Moreover, the analysis demonstrated a significant cointegration between GDP per capita, GCE, and poverty reduction, indicating that these variables are interrelated in the long run. This implies that government expenditure and economic growth are crucial factors in the ongoing efforts to alleviate poverty in Tanzania. Based on these insights, it is recommended that the government increase investment in education and health services to further enhance GDP per capita growth. Additionally, expanding infrastructure projects can create employment opportunities, directly impacting poverty reduction. Lastly, implementing efficient fiscal policies that prioritize social welfare spending will sustain and amplify the positive trends in poverty alleviation