Skip to main navigation menu Skip to main content Skip to site footer

Vol. 8 No. 1 (2022)
March 2022

Articles

Examining the determinants of import demand in Tanzania: An ARDL approach

https://doi.org/10.15678/IER.2022.0801.05

Published 2022-03-31

  • Nomfundo Portia Vacu
    • ,
  • Nicholas Mbaya Odhiambo

Nomfundo Portia Vacu
Department of Economics, University of South Africa

Nicholas Mbaya Odhiambo
Department of Economics, University of South Africa

Abstract

Objective: This study estimates the determinants of import demand in Tanzania using time-series data for the period from 1985 to 2015.

Research Design & Methods: The study applied the ARDL approach on Tanzania’s time-series data to examine the key drivers of import demand. The study used both aggregate import demand model (i.e., Model 1) and disaggregated import demand models, i.e., Model 2 (for consumer goods), Model 3 (for intermediate goods) and Model 4 (for capital goods) to examine this linkage.

Findings: The study found that in Model 1, aggregate imports in Tanzania are positively influenced by investment and exports, and negatively determined by trade policy. In Model 2, it was found that imports for consumer goods are positively influenced by consumer spending and foreign reserves, but negatively influenced by trade policy. In Model 3, imports for intermediate goods were found to be positively influenced by exports in the long run. Finally, in Model 4, the study found imports for capital goods to be positively influenced by exports (in the short- and long-run), but negatively influenced by investment (in the short-run).

Implications & Recommendations: The study recommends that policymakers in Tanzania should strengthen their macroeconomic policies to ensure that their imports are not consumption-based and have an enhancing effect on the country’s economic activities.

Contribution & Value Added: The study contributes to the empirical body of knowledge by incorporating various components of disaggregated import demand. This is an aspect that is scant in the existing literature as most previous studies only focused on aggregate import demand.

Keywords

aggregate Imports, disaggregated Imports, Tanzania, ARDL, error correction model

(PDF) Save

Author Biography

Nomfundo Portia Vacu

Lecturer at the University of South Africa (South Africa). Her research interests include international economics, macroeconomics, and public economics.

Nicholas Mbaya Odhiambo

Professor of Economics & Head: Macroeconomic Policy Analysis (MPA) Programme, University of South Africa. His research interests include development economics, macroeconomics, international economics, and monetary Economics.

References

  1. Adam, A., Katsimi, M., & Moutos, T. (2011). Inequality and the import demand function. Oxford Economic Papers, 10(1), 367-384. DOI:10.2307/41683139
  2. Agbola, F. W. 2009. Aggregate Imports and Expenditure Components in the Philippines: An Econometric Analysis. Indian Economic Review, 44 (2), 155-170. https://www.jstor.org/stable/29793938
  3. Alesina, A., & La Ferrara, E. (2000). Participation in heterogeneous communities. Quarterly Journal of Economics, 115 (3), 847-904. https://doi.org/10.1162/003355300554935
  4. Anaman, K. A., & Buffong, S. M. (2001). Analysis of determinants of aggregate import demand in Brunei Darussalam for 1964 to 1997. Asian Economic Journal 15(1), 61-70. https://doi.org/10.1111/1467-8381.00123
  5. Arize, A. C., & Malindretos, J. (2012). Foreign exchange reserves in Asia and its impact on import demand. International Journal of Economics and Finance, 4(3), 21-32. http://dx.doi.org/10.5539/ijef.v4n3p21
  6. Bakari, S., & Mabrouki, M. (2017). Impact of exports and imports on economic growth: new evidence from Panama. Journal of Smart Economic Growth, 2(1), 67-79.
  7. Bathalomew, D. (2012). An econometric estimation of the aggregate import demand function for Sierra Leone, Journal of Monetary and Economic Integration, 10(4), 5-24.
  8. Budha, B. (2014). The role of expenditure components in Nepal’s import from India. South Asia Economic Journal, 15(1), 37-54. https://doi.org/10.1177%2F1391561414525720
  9. Busse, M., & Koeniger, J. (2012). Trade and economic Growth: A re-examination of the empirical evidence. SSRN Electronic Journal. http://dx.doi.org/10.2139/ssrn.2009939
  10. Chimobi, O. P., & Ogbonna, B. B. C. (2008). Estimating aggregate import-demand function in Nigeria: a co-integration approach. Journal of Research in National Development, 6(1), 170-182. DOI:10.4314/jorind.v6i1.42411
  11. Dutta, D., & Ahmed, N. (2004). An aggregate import demand function for India: a co-integration analysis. Applied Economic Letter, 11(10), 607-613. http://dx.doi.org/10.1080/1350455042000271134
  12. Fukumoto, M. (2012). Estimation of china’s disaggregate import demand functions. China Economic Review, 23(2), 434-444. https://doi.org/10.1016/j.chieco.2012.03.002
  13. Fatukasi, B., & Awomuse, B. O. (2011). Determinants of Import in Nigeria: Application of Error Correction Model. Centrepoint Journal, Humanities Edition, 14 (1), 52-72.
  14. Hossain, S., Sen, K. K., Abedin, T., & Chowdhury. M. S. R. (2019). Revisiting the import demand function: a comparative analysis. Dynamic econometric models, 9, 5-27. DOI:10.12775/DEM.2019.001
  15. Huang, L. C., & Chang, S. H. (2014). Revisit the Nexus of Trade Openness and GDP Growth: Does the financial System Matter? The Journal of International Trade & Economic Development, 23, 1038-1058. https://doi.org/10.1080/09638199.2013.830638
  16. Mishra, P. K. (2012). The dynamics of the relationship between imports and economic growth in India. South Asian Journal of Macroeconomics and Public Finance, 1(1), 32-45. DOI:10.1177/227797871200100105
  17. Msaraka, S. S., & Hongzhong, Z. (2015). Economic growth and trade performance in Tanzania. Developing Country Studies 5(18), 142-149.
  18. Narayan, P., & Smyth, R. (2005). The determinants of aggregate import demand in Brunei Darussalam: an empirical assessment using a cointegration and error correction approach. The Singapore Economic Review, 50(2), 197-210. https://doi.org/10.1142/S0217590805001974
  19. Narayan, S., & Narayan, D. (2010). Estimating import and export demand elasticities for Mauritius and South Africa. Australian Economic Papers, 49(3), 241-252. https://doi.org/10.1111/j.1467-8454.2010.00399.x
  20. Mansi, N., & Nteegah, A. (2016). Analysis of factors influencing import demand in Nigeria. International Journal of Arts Humanities and Social Sciences, 1(5), 33-42.
  21. Omoke, P. C. (2012). Aggregate import demand and expenditure components in Nigeria. AUDCE, 8(1), 150-163.
  22. Pesaran, M. H., & Pesaran, B. (2009). Time Series Econometric using Microfit 5.0. Oxford University Press: Oxford.
  23. Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289-326. https://doi.org/10.1002/jae.616
  24. Razafimahefa, I. F., & Hamori, S. (2005). Import demand function: some evidence from Madagascar and Mauritius. Journal of African Economies, 14(3), 411-434. http://dx.doi.org/10.1093/jae/eji014
  25. Samuel, G. M. (2015). Trade liberalization and disaggregated import demand in Uganda. Modern Economy, 6(3), 317-337. http://dx.doi.org/10.4236/me.2015.63030
  26. United Nations Conference on Trade and Development database (2015). Retrieved from http://www.unctadstat.unctad.org, October 2018.
  27. World Bank (2016). World Bank Indicators. Retrieved from http://www.worldbank.org/indicators, September 2017.
  28. Yahia, A. F. (2015). An econometric estimation and evaluation of the import function in the Libyan economy. Journal of Economics, Business and Management, 3(10), 995-998. http://dx.doi.org/10.7763/JOEBM.2015.V3.322
  29. Zahonogo, P. (2016). Trade and economic growth in developing countries: evidence from Sub-Saharan Africa. Journal of African Trade, 3(1-2), 41-56. https://doi.org/10.1016/j.joat.2017.02.001

Downloads

Download data is not yet available.

Similar Articles

1 2 3 4 5 6 > >> 

You may also start an advanced similarity search for this article.