This paper examines the impact of grants on economic growth in Tanzania from 1986 to 2013. The empirical evidence shows that, first, if the non-linear effect of grants is not considered, grants appear not to cause economic growth. Second, when the non-linear effect is considered, grants are revealed to cause economic growth. There is evidence of a diminishing return from grants. Third, there is some evidence of a reduction in the inflation rate and export expansion having a positive effect on economic growth. Fourth, the impact of grants on economic growth is revealed not to be conditional upon a certain policy.
This paper examines the impact of grants on economic growth in Tanzania from 1986 to 2013. The empirical evidence shows that, first, if the non-linear effect of grants is not considered, grants appear not to cause economic growth. Second, when the non-linear effect is considered, grants are revealed to cause economic growth. There is evidence of a diminishing return from grants. Third, there is some evidence of a reduction in the inflation rate and export expansion having a positive effect on economic growth. Fourth, the impact of grants on economic growth is revealed not to be conditional upon a certain policy.
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