The impact of trade liberalization on traditional agricultural exports in Tanzania: a case of sisal

The impact of trade liberalization on traditional agriculture commodities appears to be fairly positive largely because of low supply capacity. This dissertation broadly examines the impact of trade liberalization on export performance of traditional agricultural export in Tanzania as the country continues to liberalize the economy with view of boosting the underlying supply capacity and it draws experience from sisal sub-sector. It applies quarterly time series data to regression analysis in which export performance of sisal is assumed to be determined by domestic income, trade partnership between nation and the real exchange rate. The study found that, there exists a long run relationship of variables employed in this study which determine exports growth of sisal. The effect of reform on the foreign exchange market as proxy of the real effective exchange rate is deemed to have positive effect on sisal export. Thus, the effect of reform on the foreign exchange market is deemed to have positive effect on export performance of sisal and therefore call for further reforms. Also, Domestic income was found to be positively related to sisal exports. Furthermore, there is a need of enhancing trade with other countries to promote export growth as shown by the strong significance of the real foreign income (YTRAD) variable included in the model. To this end, understanding the outcome of trade policy reforms and the link with trade performance would require an assessment of the factors that influence the development of export production capabilities. Addressing these issues could raise the efficiency gains that can be reaped from greater openness.