The Impact of Exports and Imports on Gross Domestic Product (GDP) Dynamics

Abstract

The study shows how international trade contributes to the gross domestic product dynamic in Tanzania. It employs the Autoregressive Distributive Lag Error Correction model to capture the dynamic relationship between long-term and short-term cointegration. The study used annual data ranging from 1991 to 2022 for time series model analysis. The results of the analysis show that the variables used have long-term equilibrium associations with GDP. After differencing once and considering three periods back goods and services exported revealed a significant and positive sign connection with GDP in the short term. Furthermore, imports show a significant and positive relationship with GDP in the short term. The paper also recommends that more investment should be made in production areas to promote exports; this enables maintainable and inclusive growth.