International Journal For Multidisciplinary Research

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The Impact of International Trade on Economic Growth in Tanzania: 2001 – 2020

Author(s) Mr. Nassibu Richard Mwaifunga
Country Tanzania
Abstract This study investigates the impact of international trade on economic growth in Tanzania using quarterly time series data from 2001 to 2020. Amid persistent trade deficits and moderate economic expansion, the research aims to uncover the distinct short-run and long-run effects of net exports and net imports on GDP growth. Drawing upon classical, neoclassical, and endogenous growth theories, the study applies the Autoregressive Distributed Lag (ARDL) bounds testing approach to model both immediate and sustained dynamics. Empirical findings reveal that net exports significantly contribute to economic growth in the long run, but exhibit a contractionary effect in the short run—suggesting production bottlenecks and delayed trade benefits. Conversely, net imports stimulate short-run growth by facilitating access to intermediate and capital goods, yet erode long-term economic performance through dependency and trade imbalances. The exchange rate was found to enhance growth over the long term while inducing short-run volatility. Foreign direct investment and inflation were statistically insignificant, underscoring concerns over sectoral allocation and macroeconomic neutrality. The study concludes that Tanzania’s growth strategy should be anchored in export diversification, managed trade openness, and industrial capacity building. It provides robust, context-specific evidence with important implications for trade policy formulation, macroeconomic planning, and structural transformation in developing economies.
Keywords International Trade; Economic Growth; Net Exports; Net Imports; Exchange Rate; Tanzania; Trade Deficit.
Field Sociology > Economics
Published In Volume 7, Issue 3, May-June 2025
Published On 2025-05-21
DOI https://doi.org/10.36948/ijfmr.2025.v07i03.45275
Short DOI https://doi.org/g9mh98
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