Employment effects of manufactured exports in Tanzania: 1993- 1998: a case study of firms under the research programme on enterprise development (RPED)

This study analyzes how manufacturing firms can increase production and employment in the presence of market size constraints. To do so it uses dynamic panel data estimation techniques to provide a deeper understanding of how exports of manufactured goods affect employment and the potential to increase production. The empirical results indicate that the performance of exporting firms in terms of their employment and potential increase production is not superior to that of non exporting firms it negatively influences the potential to increase production. The study concludes that exporting more manufactured goods is the key to expansion of the market size and simultaneously increasing production and employment especially because non- exporting firms seem to be already constrained from producing more output as the domestic demand cannot fully absorb it. Therefore, manufacturing sector policies should continue to focus on promoting export industries.