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Building knowledge for trade and development

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Following its first online course on trade and poverty, the Virtual Institute offered selected graduates financial and mentoring support to apply their knowledge by writing country case studies on trade and poverty. The 12th of such studies, "Welfare effect of cereal export bans in the United Republic of Tanzania," was developed by Mesia Ilomo of Vi core member, the University of Dar es Salaam Business School. The project was funded by the One UN Fund for Tanzania.
 
As existing research on the issue has provided mixed results, the paper aims to complement it by looking in greater detail into the impact of maize export bans on different regions of the country. 
 
Depending on their level of integration into the East African Community (EAC), the main export market for Tanzanian maize, Ilomo categorizes regions into EAC border regions and peripheral regions.
 
The methodology uses a non-parametric approach and draws on data from the 2007 Household Budget Survey of the Tanzania Bureau of Statistics, and price data from the Ministry of Industry and Trade and the World Food Programme.
 
The study finds that the level of price transmission (from international to domestic prices) is higher in regions bordering the EAC, and that the export ban is associated with an increase in price in most EAC border regions and a decrease in price in most peripheral regions. 
 
In terms of the consumer welfare effect of the ban, Ilomo finds that at the national level, the ban led to a household welfare loss of approximately 1.5 percent, with female-headed households suffering more than male-headed households. At the regional level, consumers in most of the EAC border regions lost from the export ban, while those in most peripheral regions experienced a welfare gain, which can be partly explained by the fragmentation of domestic markets. 
 
Findings in this paper contribute to the debate about the appropriateness of non-tariff measures in trade policy, and provide additional insights, particularly regarding the heterogeneous effects of policy measures, which might encourage targeted interventions that are location-specific.
 

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