The Impact of Trade Liberalization on Economic Growth in Tanzania

Abstract

In the early 1990s and after the collapse of communism, some economists and quite a few policy-makers expressed highly optimistic forecasts about the future economic growth of subsanaran Africa. Those euphoric expressions implied, directly or indirectly, that the (rather cosmetic) political regime changes also were accompanied with structural economic regime changes. In this paper, we hypothesize that as far as Sub-Saharan economies are concerned, there were no regime (structural) changes as alleged (or alluded) by some policymakers (economists). We also argue that the mantra for openness cannot be a substitute for economic growth that requires sound economic policies and major structural changes (economic as well as political). In addition, we argue that openness by itself is insufficient to serve as an "engine" of economic growth. We support our arguments through an extensive review of the theoretical and empirical literature. We use two empirical methods to refute the idea that openness has helped Sub-Saharan African countries achieve improved economic growth. Our graphical illustrations vividly indicate that it is not apparent that these countries were either completely open or gained extra benefits from the presumed openness. [PUBLICATION ABSTRACT]