The effect of exchange rate, inflation rate, interest rate and economic growth on agriculture export earnings in Tanzania

Abstract

The study examined the effect of exchange rate, inflation rate, interest rate and economic growth on agriculture export earnings in Tanzania. Non experimental research design was deployed and the secondary data were collected and analysed from 1990 to 2019. Multiple linear regression analysis was employed to measure the effect of independent variable on dependent variable. Multicollinearity, heteroscedasticity and autocorrelation were performed to validate the model. The study findings showed insignificant relationship between exchange rate and agriculture export earnings. The inflation rate has a positive and significant influence on agriculture export earnings. Moreover, the economic growth positively influences agriculture export earnings and the interest rate is significant and positively influences agriculture export earnings which mean effective monetary targeting and accommodating monetary policies should be designed and implemented as the needs arise. The study recommends that, the government should use its fiscal and monetary policy to maintain the level of interest and inflation in a country since they have great influence to agricultural export earnings. The government needs to boost further economic growth, using fiscal and monetary policy tools to maintain the level of inflation and interest rate so as to archive a significant increase in agricultural export earnings. There is also need to boost supply in the agriculture sector through incentives and subsidies that will lead to lower cost of production.