Contribution of Agricultural Exports to the Economic Growth in Tanzania from 1984 to 2023

Abstract

This study investigates the short-term contribution of agricultural exports to Tanzania’s economic growth from 1984 to 2023 using annual time series data and a Vector Autoregressive (VAR) model. The results reveal that agricultural exports are the most significant driver of GDP growth, with a 1% increase leading to a combined GDP growth of approximately 0.71% after periods two and three, indicating a delayed but substantial positive effect. Granger causality tests further confirm a unidirectional causal relationship from agricultural exports to economic growth, highlighting their key role in driving GDP. The labour force also positively influences growth, whereas gross capital formation exhibits a negative short-term impact. These findings align with the Export-Led Growth (ELG) theory, emphasising that exports stimulate foreign exchange earnings, investment, and productivity. Based on these results, the study recommends that the government prioritise policies promoting agricultural exports, including incentives for value addition, diversification of export crops, and improved access to international markets. Strengthening infrastructure, improving market access, providing technical support to farmers and agribusinesses, and facilitating trade through streamlined customs procedures can further enhance export competitiveness. Additionally, policies should focus on improving labour productivity through education, skills development, and inclusive participation in export-related activities. Implementing these measures is crucial for achieving the government’s target of raising agricultural export value to USD 5 billion by 2030.