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This paper reveals the source of rapid economic growth in Tanzania since market reform in the late 1980s. It applies the variance bounds cointegration test to economic growth, investment, exports, and aid inflow. The cointegration test results show that these variables are cointegrated. The error correction model shows that export expansion causes economic growth positively. Meanwhile, economic growth is revealed not to cause export expansion. The results are robust to the measure of economic growth rate. Neither investment nor aid inflow is revealed to be the source of the rapid economic growth of Tanzania.

Export Expansion and Economic Growth in Tanzania