The Impact of Industrialization on Economic Growth in Tonga

Abstract

This study examines the impact of industrialization on economic growth in Tonga. The Tongan government has worked tirelessly to ensure that the country achieves and sustains industrialization to drive economic growth. This study was undertaken because of conflicting findings from previous studies on the nature of the relationship that exists between economic growth and industrialization. Some studies have shown that industrialization has a positive and significant impact on economic growth, while others have not. The study used secondary data from World Bank data statistics and specified a model where GDP was the dependent variable while industrial output, inflation, interest rate and exchange rate were the independent variables. Jamovi software was used to analyze the data using multiple regression analysis. The results show that industrialization and exchange rate have a positive and significant impact on economic growth in Tonga. This implies that the existing industrialization policy should be maintained and implemented accordingly. The government of Tonga should continue to provide a good and attractive environment for industrial growth in the country. Replication of this study in other countries is recommended and future studies are also recommended to consider the inclusion of other macroeconomic indicators such as FDI and others as variables.