The Impact of Manufacturing Exports on Economic Growth in Tanzania: A Time Series Analysis

Abstract

This study investigates the impact of manufacturing exports, specifically
ceramics, iron and steel, and plastics on economic growth in Tanzania from 1991
to 2023. Grounded in the Heckscher-Ohlin and Export-Led Growth theories,
using a multiple regression model supported by diagnostic stability tests and a
Variance Inflation Factor (VIF) test to ensure robustness. The results reveal that
exports of ceramics and plastics have significantly increased over the study
period and positively contributed to economic growth, reinforcing the role of
export expansion in driving economic development. However, the growing
volume of plastic exports raises environmental concerns, suggesting a trade-off
between short-term economic benefits and long-term ecological sustainability.
In contrast, iron and steel exports show no substantial impact on growth, possibly
due to dependency on imported raw materials, limited technological
advancement, and underdeveloped domestic value chains. The analysis also finds
that foreign direct investment (FDI) exerts a positive effect on growth, whereas
exchange rate fluctuations have minimal influence on the performance of
Tanzania’s manufacturing sector. These findings underscore the need to
strengthen the country’s export-led growth strategy by enhancing support for
manufacturing sectors through targeted investment, technology upgrading, and
industrial policy. They also highlight the importance of designing incentive
structures that not only boost competitiveness in export markets but also
encourage environmentally sustainable production practices. Addressing these
areas, Tanzania can better harness the potential of its manufacturing sector to
drive inclusive and sustainable economic growth.

Keywords: Manufacturing exports, impact, economic growth, time-series, Tanzania.