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Developing countries implement protectionist policies like imposing tariffs, with the aim of promoting domestic
production. This study assesses the impact of the imposed tariffs on edible oil on Tanzania’s economy using a
recursive dynamic computable general equilibrium model (CGE). Findings from this study show that
implementing the tariff intervention on the dibble oil sub-sector has two principle outcomes; first, it triggers
domestic producers to supply more due to the rise in demand and prices for the commodities, thus increases
domestic production to meet demand; second, it reduces imports, consequently, decreasing citizens’ welfare by
limiting the availability and access options from imported commodities. Protectionist policies, when solely used
as a solution to increase domestic production in a sector that is inefficient in terms of productivity, creates a supply
deficit in the market, thus reducing consumers’ welfare. Therefore, to improve sustainability and increase
industrial competitiveness, it is imperative to promote policies and interventions that target increasing productivity.
Interventions, like the use of improved seed and other modern technologies, that reduce costs of production are
critical as commodities will be sold at a slightly competitive premium or the same prices as imported commodities. |
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