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In the empirical literature on the revenue consequences of trade liberalization, most
studies have focused on cross-country analysis. Because these studies are static in nature, they
have not addressed the short-run and long-run dynamic public revenue and public investment
consequences of economic reforms in developing countries. This dissertation contributes to the
literature employing a dynamic time series analysis ofthe three East African countries-Tanzania,
a co-integration and error-correction framework to
distinguish between short-run and long-run relationships.
The results indicate that trade reforms in Tanzania, Kenya and Uganda had varying
impacts on government revenue, tax performance and public investment spending in these three
countries. It is demonstrated that trade reforms had adverse impact on government revenue in
Uganda, but not in Tanzania and Kenya. The results also show that Tanzania has had the weakest
overall tax revenue and public investment. Poor tax performance and erratic revenue generation
have been problems in all three countries, contributing to adverse impacts on public investment
spending |
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