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Causality Relationships between Total Exports with Agricultural and Manufacturing GDP in Tanzania

Discussion Papers

No.136

by Nicolaus Herman Shombe
February 2008

ABSTRACT

TThis paper, investigates causal relationships among agriculture, manufacturing and export in Tanzania by using time series data for the period between 1970 and 2005. The empirical results show in both sectors there is Granger causality where agriculture causes both exports and manufacturing. Exports also cause both agricultural GDP and manufacturing GDP and any two variables out of three jointly cause the third one. There is also some evidence that manufacturing does not cause export and agriculture. Regarding cointegration, pairwise agricultural GDP and export are cointegrated, export and manufacture are cointegrated. Agriculture and manufacture are cointegrated but they are lag sensitive. However, three variables, manufacturing, export and agriculture both together are cointegrated showing that they share long run relation and this has important economic implications.

Keywords: Causality, agricultural and manufacturing GDP, export, Tanzania
JEL classification: C5, C12, C32, F14, F40

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