Assessing the effect of agricultural export values on foreign exchange rate in Tanzania
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Date
2020
Authors
Mlay, Noel
Journal Title
Journal ISSN
Volume Title
Publisher
Mzumbe University
Abstract
Agricultural sector in Tanzania employs over 65% of the Tanzania population (NBS, 2017 and contributes to foreign exchange earnings through crops exports. This study aimed at examining the effect of agricultural export values to Tanzanian foreign exchange rate and assessed if there is long-run relationship between agricultural exports value and foreign exchange rate using secondary data on total exports, agricultural exports, imports and foreign exchange data from 1989/1990 to 2018/2019. The Regression analysis, Unit Root Test, Johansen Test, Vector Autoregression and Granger causality test were used for analysis. The study concludes that, both total imports and total exports have significant influence on Tanzania exchange rate. Furthermore, it was observed that, there is a causality between total agricultural exports and foreign exchange rate in Tanzania whereby, foreign exchange rate causes agricultural exports and not otherwise. Also, the causality between total imports and total exchange rate is that total import cause’s foreign exchange rate in Tanzania. Regarding the long run relationship between agricultural exports value and foreign exchange rate in Tanzania, it was observed that there is long-run relationship that exists between agricultural export value and foreign exchange rate in Tanzania. The conclusions obtained in this study are very useful for policy making especially on use of foreign exchange rate to stimulate exports. For the Tanzania case, it was observed that devaluation will increase agricultural exports and not total exports. Also, regarding to imports, it was observed that, the total imports have negative impact on Tanzania Shilling hence effort to reduce imports pressure should be implemented to reduce importation.
Description
A dissertation submitted to Mzumbe University as a partial fulfilment of the requirements for the award of the Master's Degree of of Science in Applied Economics and Business (MAEB) of Mzumbe University
Keywords
Agricultural, Foreign exchange, Crops exports
Citation
APA