An Econometric Analysis of the Influence of Trade Liberalisation on Sesame Export in Tanzania

Abstract

This study investigates the impact of trade liberalisation on sesame exports in Tanzania, with domestic production, real exchange rate, and sesame real world prices as controlling variables. Using a quantitative time-series approach, the analysis employs an ARDL-ECM framework to estimate both short-run and long-run relationships. The results confirm the existence of a long-run equilibrium among the variables, as indicated by a negative and statistically significant error correction term (coefficient = -0.4268, p = 0.001), suggesting that approximately 42.7% of short-run deviations adjust in each production period. Results further confirm that, in the long run, domestic sesame production quantity (lnPQ) is the only significant determinant, with a 1% increase in production leading to a 0.83% rise in exports (p = 0.004), highlighting the importance of production capacity for sustained export growth. In the short run, trade liberalisation and real exchange rate influence sesame exports. Trade liberalisation has a positive and significant effect, where a 1% increase in trade liberalisation in the previous period raises exports by 1.58% (p = 0.047). In contrast, a 1% increase in the real exchange rate temporarily reduces exports by 1.21% (p = 0.041), reflecting short-term fluctuations in competitiveness. These findings indicate that immediate export expansion is driven by liberalised trade policies, whereas long-term sustainability relies on domestic production growth. The study recommends coordinated strategies that combine effective trade liberalisation measures, improved market access, strengthened production capacity, and institutional support for exporters to enhance Tanzania’s global competitiveness and achieve sustainable export growth in the sesame sub-sector.