An analysis of Tanzania’s export diversification, a case of spices export

This study is set out to assess and analyze export diversification of Tanzanian, a case of spices export. The E- Views was employed on econometric analysis of quarterly spices export data for the 2001-2007period. The focus was to see how different variables such as; real exchange rate(RER), investment as a ratio to GDP(INVGDP), GDP index of Tanzania’s major trading partners(YTRADI), domestic income(Y) and previous years’ spices export (SX) impact Tanzania’s spices export. The study has found that the main determinants of export diversification in Tanzania include REER, Y, YTRADI, and INVGDP. Generally, the factors confirmed the theoretical postulates and findings of previous studies that export diversification is by large extent driven by the economic level of income, investment and GDP index of the trading partners and the real exchange rate. Generally the study concludes that spices export growth is dependent on the real exchange rate, the national income, the GDP index of Tanzania’s main trading partners and total investments as a ratio to Tanzania’s GDP. Furthermore the study recommends that Tanzania enhances trade with other countries in order to promote export diversification and spices export growth in particular. This is due to the significance of the GDP index of Tanzania’s major trading partners (YTADI) variable included in the model