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The Impact of Trade Liberalization on Economic Growth in Tanzania

Author

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  • Mayasa Mkubwa Hamad
  • Burhan Ahmad Mtengwa
  • Stabua Abdul Babiker

Abstract

The broad objective of this study is to analyze the effect of trade liberalization on economic growth in Tanzania. The impact of trade liberalization on economic growth has raised a great attention to many researchers in the international trade arena. Various studies have been conducted however the literature still has the mixed bag of results. Thus, the researchers were motivated to pursue this study so as to fill the gap in the International Trade in Tanzania. The study adopted a simple linear regression model where real GDP was the dependent variable while trade openness was the independent variable. Annual time series data was used covering the period 1970-2010. This overall period was then subdivided into a closed economy period (1970-1985) and a open economy period (1986-2010). OLS technique was used to estimate the regression model twice, regarding the two sub-periods. The empirical findings indicated that trade openness had a positive and significant effect on economic growth in Tanzania. However, this effect was relatively greater during the closed economy compared to the open economy period. It has been indicated that since late 1980s Tanzania experienced continuous trade deficits in her accounts. This has been the contributing factor in the obtained results. Thus, the study recommended that there is a need for the country to put strong initiative on adding value on her exports so as to compensate for imports. There is a need of developing more domestic industries and attracting more investors in the economy. Also the elimination of unnecessary tariffs is required.

Suggested Citation

  • Mayasa Mkubwa Hamad & Burhan Ahmad Mtengwa & Stabua Abdul Babiker, 2014. "The Impact of Trade Liberalization on Economic Growth in Tanzania," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 4(5), pages 514-532, May.
    • Handle: RePEc:hur:ijarbs:v:4:y:2014:i:5:p:514-532
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    References listed on IDEAS

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    1. Evguenia Bessonova & Konstantin Kozlov & Ksenia Yudaeva, 2003. "Trade Liberalization, Foreign Direct Investment, and Productivity of Russian Firms," Working Papers w0039, New Economic School (NES).
    2. Romain Wacziarg & Karen Horn Welch, 2008. "Trade Liberalization and Growth: New Evidence," The World Bank Economic Review, World Bank, vol. 22(2), pages 187-231, June.
    3. Jeffrey D. Sachs & Andrew Warner, 1995. "Economic Reform and the Process of Global Integration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 1-118.
    4. Salinas, Gonzalo & Aksoy, Ataman, 2006. "Growth before and after trade liberalization," Policy Research Working Paper Series 4062, The World Bank.
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    Citations

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    Cited by:

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    3. Emagne, Yetsedaw, 2017. "Exploring the Relationship between Trade Liberalization and Ethiopian Economic Growth," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 26(01), April.
    4. Sayef Bakari, 2017. "The Relationship between Export, Import, Domestic Investment and Economic Growth in Egypt: Empirical Analysis," EuroEconomica, Danubius University of Galati, issue 2(36), pages 34-43, November.
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    6. Bakari, Sayef, 2016. "Impact of Exports and Imports on Economic Growth in Canada: Empirical Analysis Based on Causality," MPRA Paper 75910, University Library of Munich, Germany.
    7. Kazi Mohammed Kamal Uddin & Munem Ahmad Chowdhury, 2021. "Attaining Sustainable Economic Growth in Bangladesh: Role of External Financial Means of Implementation," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 9(1), pages 1-14, March.
    8. Mwinlaaru, Peter Yeltulme & Ofori, Isaac Kwesi, 2017. "Real exchange rate and economic growth in Ghana," MPRA Paper 82405, University Library of Munich, Germany.
    9. Samuel Antwi & Prince Yeboah Boateng & Awudu Salley, 2021. "?he effect of foreign direct investment on economic growth in Ghana: the role of exchange rate volatility," Bulletin of Applied Economics, Risk Market Journals, vol. 8(1), pages 81-96.
    10. Bekele, Yetsedaw Emagne, 2017. "Exploring the Relationship between Trade Liberalization and Ethiopian Economic Growth," MPRA Paper 83584, University Library of Munich, Germany.
    11. Adedapo Odebode & Olajide Sunday Oladipo, 2021. "Does Meaningful Relationship Exist Between Trade Liberalization and Economic Growth? A Case Study of a Small Open Economy," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 11(2), pages 1-5.

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