Export incentives, balance of payments and economic growth: the case of Tanzania

The objective of this study was to develop and estimate the effects of export incentives on exports balance of payments and economic growth in Tanzania. The study was motivated by the need to have a systematic analysis of the relationship between Tanzania's trade policy incentives and its macroeconomic performance. The study is important for guiding the choice of policies consistent with the economic institutions in Tanzania. Econometric as well as qualitative analysis was employed. A two equations general growth model in which real exports enter as an input in the production process was developed and estimated by Ordinary Least Squares technique. Time series data for the period 1980 to 1992 were used. The model was empirically supported by the signs and statistical significance of the estimated coefficients. The study concludes that though trade is important in Tanzania's development process, is more of "a handmaiden" than an "engine" of economic growth in Tanzania. The study revealed that the incentives were mildly applied and conflicting policies has affected the realization of their impact.