The service sector in Tanzania has become increasingly dominant in the country’s economic landscape, significantly contributing to GDP and offering potential avenues for inclusive and sustainable economic growth. This policy brief examines the evolution of the service sector, identifies key opportunities, and present econometric results on the drivers of the service sector expansion for the period 1990 -2023 obtained from a time series Autoregressive Distributed Lag Model (ARDL). The brief also recommends actionable strategies to capitalize on the service sector potential for economic growth and structural transformation. By focusing on high-growth sub-sectors, enhancing trade facilitation, promoting innovation, and investing in human capital, Tanzania can unlock the full potential of its service sector, driving sustainable and inclusive development.
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