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Trade Policies and Export growth - employment and poverty impact in Tanzania

Author

Listed:
  • Levin, Jörgen

    (Department of Business, Economics, Statistics and Informatics)

  • Olin, Mikael

    (Department of Business, Economics, Statistics and Informatics)

Abstract

This report focuses on trade and exchange rate policies in Tanzania. The composition of Tanzanian exports has changed dramatically since early 2000. In examining the determinants of trade with a particular focus on Tanzanian exports, we found that changes in the real exchange rate did not have a significant impact on exports. However, supply-side effects and trading partner economic performance are more important, as is the distance to market (or transport cost). The second part of this report discusses the impact of trade reforms on employment and poverty in the Tanzanian economy. In the long-term scenarios poorer households seem to gain more from trade liberalisation compared to the richer household groups. In the short-term, trade liberalisation would be beneficial to female workers and poor households, if labour is able to move between sectors. If wages are rigid, trade liberalisation will lead to unemployment and wages for casual labour will drop significantly. A nominal wage increase during liberalisation can have a significant impact on unemployment, driving casual workers’ wages down further. If the trade union adjusts worker premiums during trade reform, this would not only save some of the jobs of members, but also benefit non-unionised workers in other sectors as well. The alternative option of a reduction in export taxes would have a stronger impact on export supply, poor households would gain more than with liberalisation..

Suggested Citation

  • Levin, Jörgen & Olin, Mikael, 2008. "Trade Policies and Export growth - employment and poverty impact in Tanzania," Working Papers 2008:1, Örebro University, School of Business.
  • Handle: RePEc:hhs:oruesi:2008_001
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    References listed on IDEAS

    as
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    3. Martinez-Zarzoso, Inmaculada & Nowak-Lehmann, Felicitas, 2003. "Augmented Gravity Model: An Empirical Application to Mercosur-European Union Trade Flows," Journal of Applied Economics, Universidad del CEMA, vol. 6(2), pages 1-26, November.
    4. World Bank, 2007. "Tanzania - Sustaining and Sharing Economic Growth : Country Economic Memorandum and Poverty Assessment, Volume 2. Main Report," World Bank Publications - Reports 7701, The World Bank Group.
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    6. Inmaculada Martínez-Zarzoso & Felicitas Nowak-Lehmann D. & Nicholas Horsewood, 2006. "Effects of Regional Trade Agreements Using a Static and Dynamic Gravity Equation," Ibero America Institute for Econ. Research (IAI) Discussion Papers 149, Ibero-America Institute for Economic Research.
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    More about this item

    Keywords

    Trade liberalisation; labour markets; poverty; Tanzania;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • F01 - International Economics - - General - - - Global Outlook
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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