Trade Liberalization and Employment Performance of Textile and Clothing Industry in Tanzania

Wumi K. Olayiwola, Johansein Ladislaus Rutaihwa

Abstract


The objective of this study is to investigate the effect of trade liberalization on employment performance of textile industry in Tanzania. The basic issue of concern is that the implementation of trade liberalization has differential impact on employment and wage in many African countries. In addressing this issue as well as achieving the objective, econometric models of employment and wage are estimated using co-integration method of analysis.  The analysis shows that effective rate of protection and export intensity have an insignificant positive impact on demand for labour, but import penetration has a significant negative impact on employment. Also, only import penetration has a significant negative impact on wage. The impact of import penetration is larger than that of export orientation, as the increase in import competition leads to a decline in labour demand. These findings point to the fact that to make trade liberalization to be effectual in Tanzania, the process of trade reform needs to be gradual and also need to be strengthened with appropriate institutional support.


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International Business Research  ISSN 1913-9004 (Print), ISSN 1913-9012 (Online)

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