Effect of exchange rates and inflation rates on Agricultural exports in Tanzania

Abstract

Agriculture is the main sector that provides employment to large part of the population and the key to economic growth of Tanzania. This study analyzed the effect of exchange rates on agricultural exports in Tanzania by employing secondary data from World Bank from 1997 to 2017 for agriculture export, real exchange rate and inflation rate. The study employed ADF test for unit root in order to make sure that variables are stationary and avoiding the problem of generating spurious regression. The study employed co-integration test to examine the relationship and Ordinary Least Square (OLS) method with a multiple linear regression to study the effect of exchange rate and inflation with respect to agricultural export in Tanzania. Using co-integration test, the study revealed that there is long run relationship among agricultural exports, inflation rates and exchange rates. The study findings revealed that exchange rate has negative relationship with agricultural export. The result also revealed that inflation has insignificant effects in agriculture exports. Tanzania should operate to ensure that agricultural sector is bound for the growth and development of the nation