Analysis of Tanzania trade balance and its determinants (1980-2010)

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University of Dar es Salaam
The purpose of this study is to analyze the Tanzania trade balance and its determinants covering the period 1980-2010. The issues of concern are that the implementations of Structural Adjustment programs (SAPs) have impact on trade balance. In achieving this objective, the model used by Mbayuni (2006) and Mohamed (2010), and Ordinary Least Square (OLS) technique is employed in the analysis. Using this approach, the study finds that Tanzania trade balance is positively influenced by Foreign Direct Investment, foreign income and government expenditure and negatively influenced by household consumption and real exchange rate. However, findings on government expenditure and real exchange rate are not satisfactory as they come with unexpected signs of coefficients and are insignificant at 5 percent significance level. The policy implication of the result is that devaluation policy will not work for Tanzania trade balance improvement but other strategies may work. The study suggests that trade balance will improve following increased foreign direct investment, reduced expenditure on non productive sectors such as luxurious goods, improvement of human and physical capital, and infrastructure.
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Balance of trade, Trade balance, Tanzania
Kilumile, T.G.(2013). Analysis of Tanzania trade balance and its determinants (1980-2010). Master Dissertation, university of Dar es Salaam. Available at (