Browsing by Author "Mosha, Goodluck R."
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Item Foreign exchange market reforms and export performance in Tanzania(University of Dar es Salaam, 2001) Mosha, Goodluck R.The objective of this study has been to examine empirically the extent to which the reforms in the foreign exchange market in Tanzania have helped to boost up the perfornance of the export sector during the 1970-1999 period. An export supply function that included the real exchange rate, real gross domestic product (a proxy for domestic productive capacity), the international terms of trade, the degree of openness of the economy and a dummy variable to capture the effects of the regime shift was estimated using Ordinary Least Squares (OLS) after examining the time series properties of the data. The main hypothesis of the study is that: Reforms in the foreign exchange market have a positive and significant impact on export supply; in particular aggregate export supply varies positively with the real exchange rate. Other related hypotheses are that: real domestic income has a positive and significant impact on aggregate export supply; the international terms of trade has a positive and significant impact on aggregate export supply; and aggregate exports respond positively to the degree of openness of the economy. The study establishes that reforms in the foreign exchange market, by inducing real exchange rate depreciations, have had a positive impact on aggregate export supply. This has an implication that restraining exchange rate overvaluation is essential in boosting up the export sector. Nevertheless, although reforms in the foreign exchange market are important in enhancing export performance, measures to diversify the export base and strengthening of the domestic productive capacity are equally important.