Improving Trade and Transport Services in Tanzania: A General Equilibrium Approach

The study uses a computable general equilibrium (CGE) approach to simulate the welfare gains of improving trade and transport services in Tanzania up to the year 2015. The model takes into account the regional differences in trading margins and the different production patterns of commercial and subsistence producers. The results show that substantial economic growth can be achieved by alleviating the existing bottle necks in marketing. The regional growth patterns of production after market improvement favour the more isolated and often poorer regions, leading to decreased regional inequality over time. The main beneficiaries of the policy change are the rural poor whose income grows faster than the income of the wealthier urban dwellers. The results suggest, that if sufficient resources and political commitment to improving trade and transport sectors can be mobilised, the economic performance can be enhanced to reach the Millennium Development Goals by 2015.