The Effect of Trade on Manufacturing Employment in Tanzania

Abstract

This research paper analyses the effect of trade on manufacturing employment in Tanzania using panel data analysis and the secondary annual panel of data of 13 subsectors in the manufacturing sector of Tanzania according to 3 digit level of ISle Rev.3 classification between 2000 and 2012. The constant-output labour demand equations are estimated and the results showed that trade in terms of exports and imports have a significant and positive impact on the employment whereas it had a negative and significant effect on wages. Since exports have a positive and significant impact on employment then the study recommends policy makers to develop appropriate toolkit to consider increasing demand of locally produced goods considering competitiveness of domestic firms, export incentive policies and cost reduction measures, to reduce electricity tariff for big consumers to increase employment in subsectors in which imports have significant and positive impact on employment, expansion in provision of financial services and improvement in transportation and communication networking by the government.