Export Trade and Economic Growth in Tanzania: A Disaggregated Approach

Abstract

This paper applies the Vector Autoregressive (VAR) technique to annual data from 1980 to 2009 to provide empirical evidence on the long-run relationship between exports trade and economic growth in Tanzania. The exports trade in this study is disaggregated into services and goods exports. Thus, the paper estimated two models. The first model deals with the relationship between export of services and growth, and the other one determines the relationship between goods export and growth. While the paper find no evidence for long-run relationship between export of goods and growth, our empirical results suggest existence of a long-run nexus between export of services and economic growth in Tanzania. The Granger causality test results have also confirmed existence of a unilateral causality from economic growth to service exports.

Keywords: Export Trade; Economic Growth; Cointegration; Granger Causality.