A Dissertation Submitted in Partial Fulfillment for the Requirements of the Award
of Master of Science Degree in Economics (MSc. Economics) of Mzumbe University
2013
Tanzanian economy is characterized by a large traditional rural sector and a small
modern urban sector. Agriculture, accounts for about half of GDP, it contributes about
85% of exports, and employs 80% of the work force. However in the recent years tourism
and mining have become the largest foreign exchange earners. Statistics show that the
value of traditional exports remained minimal compared to nontraditional exports,
whereby the value of non-traditional exports were US$ 2,270.6 million and US$ 1,704.5
million in 2008 and 2007 respectively, representing to an increase of 28.8 percent
(Economic Survey, 2008). On the other hand the value of traditional exports were USD
319.7 million and USD 418.4 million in 2008 and 2007 respectively (URT, 2008). This
study examined factors affecting export performance in Tanzania using a time series data
for the period between 1990 and 2009. Specifically, the study analyzed the influence of
macroeconomic factors such as Foreign Direct Investment, Gross Domestic Product,
inflation rate, real exchange rate and terms of trade. The main proposition of the study
was that macroeconomic factors significantly influence export performance.
In testing this proposition, three regression models were estimated for total export,
traditional exports and non-traditional exports. Empirical results and analysis indicated
that real exchange rate and foreign direct investment were significant to export
performance in all sectors that is total export, traditional and nontraditional exports.
Gross Domestic Product was also found significant in all sectors except traditional sector.
However, Inflation Rate and Terms of Trade were found significant determinants to total
export and traditional exports. The same variables were found insignificant to
nontraditional exports. The study concludes with a recommendation to improve export
performances for both traditional and nontraditional exports, as well as to diversify
export base of the country by formulating good trade policy, attract more Foreign Direct
Investment, improve infrastructure and create good business environment