Real exchange rate behaviour and merchandise exports in Tanzania.
| dc.contributor.author | Rutasitara, Longinus | |
| dc.date.accessioned | 2019-08-14T09:49:14Z | |
| dc.date.accessioned | 2020-01-07T15:57:57Z | |
| dc.date.available | 2019-08-14T09:49:14Z | |
| dc.date.available | 2020-01-07T15:57:57Z | |
| dc.date.issued | 1996 | |
| dc.description | Available in print form | en_US |
| dc.description.abstract | The present study examines the relationship between export performance and the real exchange rate (RER) behaviour in Tanzania. The analysis of the RER (defined as the relative price of the tradables to nontradables) seeks to establish the influence of the factors affecting the RER. These factors (RER determinants) include macroeconomic and trade policies, the parallel exchange market premium, external terms of trade and capital inflows. In turn, the study aims to infer on the indirect influence and policy impact of these factors on export performance through the RER. The RER behaviour in this study includes three elements: the actual RER, the RER misalignment and uncertainty. These are estimated and their relationship with export performance established. It is hypothesised that changes in the RER are positively related to export performance, while misalignment and uncertainty are negatively related to exports. To the extent that the RER determinants cause an appreciation (or depreciation) of the RER, then they harm (or boost) export expansion. The study further hypothesises that agricultural exports are less responsive to the RER than manufactured exports. Largely secondary data and documented material are used. The study uses both qualitative and quantitative analyses. The latter include simple trend, correlation and regression analyses. Different measures of exchange rates are computed and their time profiles analysed. Measures of aggregate export performance are also constructed and major trends related to an evolving export policy and the exchange rate regimes. The respective influences of the RER determinants on the actual RER are investigated via a simple RER model. Correlation and regression analyses are used to investigate the relationships between exports and the RER, and RER misalignment and RER uncertainty. The indirect effects of the policy and "quasi"-policy RER determinants on export performance are derived as a product of the derivative of RER with respect to RER determinant (in the RER function) and the derivative of the exports with respect to the RER (in the export function). The study finds that while official policy opposed nominal exchange rate adjustment even as internal and external imbalances increased, the RER appreciation and misalignment were particularly strong since the end of the 1970s to mid-1980s. Trends in real exports show weakest performance also during this sub-period. Some recovery during the latter half of the 1980s when the RER begins to depreciate is noted. Along with the descriptive analyses, the quantitative analyses confirm the hypotheses that export performance is directly related to the RER and negatively related to RER misalignment and RER uncertainty. Further, the responsiveness of agricultural sector exports to changes in the RER behaviour is found to be smaller than that for total and manufactured exports. The results of the study point to a need for policy actions aimed at reducing RER appreciation, RER misalignment and uncertainty. Overly expansionary macroeconomic policies have an undesirable effect of fuelling inflation. Efforts in dealing with the chronic budget deficits are highly recommended. As for exchange rate policy, a flexible official nominal exchange rate that is varied with continual reference to the difference between the domestic and (weighted) foreign rates of inflation is appropriate. Also, to avoid the incidence of RER misalignment and uncertainty the state should demonstrate a steady commitment to the recent economic reforms. The lower elasticities of supply response of the agricultural exports imply the need for fairer budgetary allocations to the agricultural sector for new and maintenance of infrastructure, education, research and extension. No less vital is the need to closely relate the producer prices of export crops to the changes in the nominal exchange rate and world prices with any taxes that affect production or sale of export crops. Manufactured exports face stiffer competition. Concern is not only with the capacity utilisation levels but also with price and quality competitiveness. There is a challenging need for government like in some Asian countries to actively support local export firms while up-holding continuing trade and exchange rate liberalisation. | en_US |
| dc.identifier.citation | Rutasitara, L. (1996). Real exchange rate behaviour and merchandise exports in Tanzania. Doctoral dissertation, University of Dar es Salaam. Available at (http://41.86.178.3/internetserver3.1.2/search.aspx?formtype=advanced) | en_US |
| dc.identifier.uri | http://localhost:8080/xmlui/handle/123456789/3042 | |
| dc.language.iso | en | en_US |
| dc.publisher | University of Dar es Salaam | en_US |
| dc.subject | Foreign exchange rates | en_US |
| dc.subject | Law and legislation | en_US |
| dc.subject | Commercial products | en_US |
| dc.subject | Modification for export | en_US |
| dc.subject | Tanzania | en_US |
| dc.title | Real exchange rate behaviour and merchandise exports in Tanzania. | en_US |
| dc.type | Thesis | en_US |