Export earnings instability in Tanzania

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University of Dar es Salaam
In a developing country like Tanzania, fluctuations in export earnings are not only caused by commodity concentration, but also by other factors such as the relative importance of the commodity, world demand conditions and the relative effectiveness of various commodity agreements. This study focuses on the performance of the traditional export crop, cotton. Its objectives are to exan1ine causes of export earnings instability in Tanzania and ascertain the impact of economic reforms in export earnings. Amongst traditional crops, cotton is the second contributor to export earnings after coffee, it is grown in more than ten out of twenty regions in the country and it supports the livelihoods of about 33 per cent of the population . Our study applies time series data. Variables are expressed in logarithmic form to reduce outliers. Stationery test is done on the data to avoid spurious results. We employ the Ordinary Least Squares (OLS) method for the purpose of estimation, this method having been preferred because of its simplicity and convenience in estimation. analysis, based on the OLS estimates, shows that policy reforms reduce export earnings instability, other variables such as nominal exchange rate; domestic inflation shows weak positive influence on export earnings instability. Increasing cotton output is found tom increase export earnings instability. Commodity concentration is the main factor contributing to fluctuations in export proceeds. It is thus recommended that Tanzania should increase the volume and quality of cotton exports and should pursue a dynamic export promotion policy.
Available in printed form, East Africana Collection, Dr. Wilbert Chagula Library, Class mark (THS EAF HF 1414.5.T34K39)
Export control, Export finance, Export marketing
Kazi, M.I (2001) Export earnings instability in Tanzania.Master dissertation, University of Dar es Salaam, Dar es Salaam.