Cloves Export Response to trade liberalization in Tanzania: A Cointegration Analysis
This paper investigates the cloves export response in Tanzania before and after trade liberalization from 1970 to 2010. Data was based on various reports and literature reviews. Findings revealed that there exists a long run or equilibrium relationship amongst the variables that are cloves export earnings, world price and real exchange rate. Trend analysis of cloves export earnings found to be improving. Empirical estimates of the cloves export earnings found with a high negative elasticity in the export earnings to the export-weighted real exchange rate. This result indicates an increase in Tanzanian export competitiveness on cloves.