Export Diversification Dynamics in Tanzania: Non-Traditional Products Approach

Abstract

This paper empirically examines the influence of export diversification on export growth, following strides towards non-traditional exports diversification in Tanzania. The causal relationship between export growth and growth rate of aggregate non-traditional products using time series data from 1980 to 2012 was examined. Growth rate of aggregate traditional products was included in the study for comparable purposes. The results indicate that growth rate of aggregate non-traditional products has a statistically significant impact on the overall export growth in the short run while that of aggregate traditional products has recorded insignificant impact. This suggests that recent export growth in Tanzania is attributed to by non-traditional product growth. How-ever, there is no long run relationship between the two variables but a bi-directional short run relationship which runs from non-traditional products to export growth and vice-versa exists.

Keywords: Export Diversification, Non-Traditional Product, Traditional product, export growth, vertical export diversification, horizontal export diversification.

JEL: F43