The Responsiveness of Agricultural Export Growth to Export Output Currency Exchange

and World Price: Case Study of Cashew Nut Industry

By

[Author Name]

[Institute Name]

[Date]
Table of Contents
ACKNOWLEDGEMENT.................................................................................................. 3
ABSTRACT................................................................................................................... 4
Chapter 1: Introduction................................................................................................. 5
1.1 Rationale of Study............................................................................................... 5
1.2 Research Background........................................................................................... 6
1.3 Problem Statement............................................................................................... 7
1.4 Research Objectives............................................................................................. 7
1.5 Hypotheses........................................................................................................ 7
1.6 Theoretical Framework......................................................................................... 8
1.7 Dependent & Independent Variables.........................................................................8
1.8 Chapter Overview............................................................................................... 9
Chapter 2: Literature Review....................................................................................... 10
Chapter 3: Research Methodology.................................................................................12
3.1 Research Design............................................................................................... 12
3.2 Research Philosophy.......................................................................................... 12
3.3 Research Approach............................................................................................ 12
3.4 Time Horizon................................................................................................... 13
3.6 Data Collection................................................................................................. 13
3.7 Statistical Technique.......................................................................................... 13
3.8 Statistical Tool.................................................................................................. 15

3.9 Future Scope.................................................................................................... 15

3.10 Ethical Concerns............................................................................................... 15
Chapter 4: Results & Analysis...................................................................................... 17
4.1. Descriptive Statistics.......................................................................................... 17
4.2. Pearson Bivariate Correlation Matrix......................................................................19
4.3. Multi Regression Analysis................................................................................... 22
Model Summary...................................................................................................... 22
ANOVA................................................................................................................ 23
Coefficients........................................................................................................... 25
4.4. Assumptions of Ordinary Least Square...................................................................29
 Autocorrelation....................................................................................................... 29
Multi-collinearity.................................................................................................... 30
Normality of Errors.................................................................................................. 31
Normal Probability Plot............................................................................................. 32
Heteroskedasticity................................................................................................... 33
Chapter 5: Discussions & Conclusion.............................................................................34
5.1. Discussions..................................................................................................... 34
5.2. Conclusion...................................................................................................... 36
5.3. Recommendations............................................................................................. 37
5.4. Limitations...................................................................................................... 37
Bibliography................................................................................................................ 38
ACKNOWLEDGEMENT

I would like to acknowledge the contributions of many of my partners and instructors who have
guided and helped me to complete this task. For the completion of this entire comprehensive
project, I would like to pay first and foremost thanks to my instructor who helped me throughout
and made my project nearly flawless. This project wouldnt have been possible without the
useful insights, constructive remarks and informative criticism of my instructor. Besides, I would
like to thank my friends for their never ending support and encouragement for the completion of
this task. They always showed me the hidden potential in me and helped me working out with
the things I never understood. So sincere thanks to them. Last but not the least; I would like to
pay real sense of gratitude to my parents and family who have motivated in every step of life.
They gave me the strength to accomplish anything in life and the faith they had in me was the
mere factor that never made me give up on things I couldnt perform properly. On the whole, my
life is incomplete without these members, and I owe the completion of this project to them.
ABSTRACT

The research primarily focused on exploring the responsiveness of Agricultural Export Output to
Export Growth, Currency Exchange and World Price: Case Study of Cashew Nut Industry. In the
research, agricultural Export Output is kept as dependent variable while the agricultural export
growth, currency exchange rates, and world market price are studied as independent variables.
The research comprises of quantitative research methodology in which secondary data is
collected for evaluating the results. The data for the research is collected using e-views. The data
for the study variable is collected for a time lapse of 53 years i.e. from 1961 2013. The data
gathered is collated using statistical package for social sciences (SPSS) software version 19.00.
The data collated is analyzed by applying the tests of Pearson bivariate correlation matrix and
multi regression analysis. To interpret the results, three individual hypotheses were designed to
test the responsiveness of Agricultural Export Output for each independent variable. The overall
results indicate that agricultural Export Output in case of cashew nit industry shows significant
responsiveness for currency exchange rates and production volume. However, a weak
responsiveness is observed in the case of world market prices. On the whole the findings of the
research show that there a significant responsiveness is shown by the Agricultural Export Output
to the export growth, currency exchange and world market price in case of cashew nut industry
of Tanzania.
Chapter 1: Introduction

The study focuses on the agricultural export situation in Tanzania, and more explanation will be
directed to cashew nut sub-sector. The study will look at the competitors in the international
market and why the agricultural export growth was lag behind. Additionally this study will
provide a clear evidence of the Tanzania cashew nut industry domestically and internationally. As
a pillar of both the export and the domestic economy, the sector of agriculture engages around
80% of labor force in Tanzania, which can be equal to 13.495 Million approximately. While it
provides a percentage of 49 to the country's GDP (Salaam, 2008). The study of motivation has
been started since 2000 as the substantial experience of economic growth and its timely
improvement (Amoro & Shen, 2013). We can take the example that the GDP growth rate of
Tanzania was as the average of 7.2 percent over the ten years (Alpha, 2006). Considering all
these points, the research has been started to conduct a survey of cashew nut industry, Tanzania.
The aim of the study is to reveal the extent of responsiveness of agricultural export growth to
Export Output, currency exchange, and the world price. The study will talk about Solow and
Ramsey theory of growth (Hatab, 2010). For the economy to grow, three factors that are capital,
labor and technology will be needed. The exogenous variables will be categorized based on these
factors. Also, some simple calculation will be presented to show how the look alike and
interpreted.

1.1 Rationale of Study

The primary aim of the research is to evaluate the responsiveness of agricultural export growth to
Export Output, currency exchange and world price taking the case of cashew nut industry of
Tanzania. This study will focus to extract results regarding the contribution of cashew nut
industry in the national earnings. Thus, the overall Export Output will be measured to evaluate
the extent of responsiveness shown by agricultural export growth. The other element is currency
exchange that will be highlighted because the exports will result in strengthening the value of
domestic currency. This will in turn benefit the Tanzanian currency and economy as a whole.
Moreover, a change in the world prices of agricultural export may also take place by the exports
of Tanzanian cashew nuts. Thus the research will focus on these three elements i.e. Export
Output, currency exchange and world price to evaluate the contribution of Tanzanian exports.
Moreover, this study will contribute to future studies by providing a useful set of findings which
will reflect the actual and true contribution of agricultural exports in world economy considering
the case of cashew nut industry.

1.2 Research Background

The government of Tanzania has taken several policy measures to address these obstacles as was
described in Agriculture and Livestock policy 1997 and the newly Agricultural Policy 2013. The
policy directed on the (i) enhancement of research, mechanization, irrigation and extension to
improve Export Output and productivity. (ii) Improve agriculture processing to improve the
value of agriculture products and hence improve its price. (iii) Strengthening inter countries
integration and other multilateral and bilateral agreements etc.

The study will base on cashew nuts subsector, but the result will be generalized to advice another
subsector that have the same nature. The study expected to be very useful to policymakers on
how to set the policy on future agricultural export due to the evidence oriented recommendation.
The study will use time series secondary data from different sources (Bojnec, 2014). The
dependent variable will be the volume of agricultural export in Tanzania. The Data of nuts
cashew export (1961-2013) will be obtained from Food & Agricultural Organization, UK.
Independent variables will be cashew nuts world market price and Export Output (19612013)
both will be obtained from FAO. The data of currency exchange rate (1961 013) will be
obtained from World Bank (Pan, 2006).

Both statistical and econometric model will be used in quantitative analysis. In statistical
analysis, line and bar graph will be used in the comparison of trends of macro variable versus
agricultural export trend. In econometric, Co-integration and Error Correlation technique will be
applied as was used by (Ferro & Wilson, 2008). The method said is the best due to the easiness
of analysis and interpretation. The cointegration test will be done through Engle- Granger
method as the method is consistent and highly efficient (Kerkela, 2005). Lastly, the speed of
adjustment of macro variables from the short run to the long run behavior will be estimated after
establishing the cointegration (Kerkela, 2005).
 1.3 Problem Statement

To evaluate the Responsiveness of Agricultural Export Growth to Export Output,

Currency Exchange and World Price: Case Study of Cashew Nut Industry

1.4 Research Objectives

To evaluate the impact of world agricultural price on the agricultural export growth in
case of cashew nut industry of Tanzania
To evaluate the impact of volume of agricultural output on the agricultural export growth
in case of cashew nut industry of Tanzania
To evaluate the impact of currency exchange rates on the agricultural export growth in
case of cashew nut industry of Tanzania

1.5 Hypotheses

H0: There is no impact of production volume of agricultural growth on the Agricultural

Export Output in case of cashew nut industry of Tanzania.

H1: There is a significant impact of production volume of agricultural growth on the

Agricultural Export Output in case of cashew nut industry of Tanzania.

H0: There is no impact of agricultural world market price on the Agricultural Export Output
in case of cashew nut industry of Tanzania.

H2: There is a significant impact of agricultural world market price on the Agricultural Export
Output in case of cashew nut industry of Tanzania.

H0: There is no impact of currency exchange rates on the Agricultural Export Output in case
of cashew nut industry of Tanzania.

H3: There is a significant impact of currency exchange rates on the Agricultural Export
Output in case of cashew nut industry of Tanzania.

1.6 Theoretical Framework

The study will introduce both endogenous and exogenous variable related and will explain how
each variable contributed to export growth. The study will use the volume of Cashew nut export
as endogenous variable together with cashew nut Export Output, currency exchange rate per US
dollar and the world price of cashew nut shell as exogenous variables. These parts necessarily
will be of different size. Below is the diagrammatic representation of the variables under
consideration.

A g ric u
ltu ra l
C u rre n c E x p o rt
y G ro w t
E xchang hf A g r i c u l t
V o
e R a te l u m e o
A g ric u ltu r u ra l
a l O u tp u t W o rld
P ric e
1.7 Dependent & Independent Variables
There are total four variables, out of which three are independent variables whose effect is
studied and one is dependent variable upon which the effect is evaluated. Independent variable is
one which is not affected by any change in the other variable. It rather impacts the other variable
studied simultaneously with it under one specific research work. For instance, an increase or
decrease in the independent variable will cause an increase or decrease in the dependent variable.
Similarly in case of an inverse relationship, an increase in the independent variable will cause a
decrease in the dependent variable and vice versa (Idsardi, 2010). The independent variables are
world agricultural price, the volume of agricultural output and currency exchange rate. These
variables will be evaluated individually, and their independent impact on the agricultural export
growth will be studied.

The dependent variable is one which relies on another variable for its increase and decrease. For
instance the increase in one variable result in an increase of dependent variable, similarly
decrease in one variable result in a decrease in the dependent variable as well. This kind of
relationship is a direct relationship. In the same context, increase in one variable result in
decrease dependent variable and decrease in one variable result in an increase in another
variable. Such a relationship is called inverse relationship (Hoekman & Messerlin, 2003). The
agricultural export growth is taken as a dependent variable that is evaluated considering the case
of cashew nut industry of Tanzania.

1.8 Chapter Overview

The research project constitutes a sum of five sections each of which is exclusive in nature and
covers a unique aspect of the study; however, all the chapters are interrelated to each other. The
first chapter is about the introduction of the research in which the topic is specified. The
background of the subject discussed instigate the interest of the reader and develop a cause to
prompt the research. Further in this chapter, a hypothesis is designed upon which the entire thesis
is based. The second chapter is about literature review in which different papers from authentic
journals are cited. The significance of the topic is extracted by referring various journal papers in
this chapter. The coverage of same in various sectors of the world strengthens the feasibility of
research conducted. To continue with the hypothesis, research methodology is designed in the
third chapter. Thus, chapter three constitutes all the research methods and research approaches
adopted to run the analysis. This chapter signifies the methods of collecting and collating data.
The statistical techniques and statistical tools are also identified here. Further to it is the chapter
four which merely focuses on the data analysis and interpretations of results. This chapter related
to analyzing the data collected by the researcher and interpreting it by attempting appropriate
techniques. On the basis of outcomes, chapter five is based in which the final conclusions are
stated. A comprehensive discussion is done to highlight the results extracted. Along with that
recommendation based on the results are suggested and also the limitations of the research are
stated for future researchers to add their contribution to the literature.
Chapter 2: Literature Review

This chapter throws light on different papers from authentic journals are cited. The significance
of the topic is extracted by referring various journal papers in this chapter. The coverage of same
in various sectors of the world strengthens the feasibility of research conducted.

Agriculture has been a source of learning since ancient times. All the tribes and civilizations used
to rely on agricultural trade for their earnings and livelihood. Same is in the case of the 21 st
century. The countries have developed their agricultural sectors for the sake of earning the
balance of payments and to gain a name in the world market. Different nations trade with one
another for the sake of getting adequacy in agricultural products. Same goes for the economy of
Tanzania; it has taken steps to improve its agricultural sector to gain a name in the world market.
There are several factors that have hindered the way of agricultural success in Tanzania.
However, a consistent approach is profound in the strategies of agricultural policies. That is why
the Tanzanian agricultural industries never lose its worth in the world market (Binuomote &
Odeniyi, 2013). When the exports in the world market reach its peak, there comes the name of
Tanzania as a key exporter. But sometimes, in the history agricultural trade, Tanzania has faced
few abrupt downfalls. All the circumstances have been a part of the agricultural history of
Tanzania, but the factor that has most influenced the progress of agricultural industries in
Tanzania are the currency rates (Hatab, 2010). Similarly, the exchange rates significantly impact
the agricultural exports but on a small scale. This is why because when a country gets its stronger
over other currencies, its presence in the world market is highlighted. The exports are increased
to earn more foreign exchange. This not only improves one sector of the nation but enhances the
overall economy by improving the balance of payments (Yusuf & Yusuf, 2007).The government
of Tanzania has taken several policy measures to address these obstacles as was described in
Agriculture and Livestock policy 1997 and the newly Agricultural Policy 2013. The policy
directed on the enhancement of research, mechanization, irrigation and extension to improve
Export Output and productivity. Improve agriculture processing to improve the value of
agriculture products and hence improve its price. Strengthening inter countries integration and
other multilateral and bilateral agreements etc. (Walkenhorst, 2007).
In another research based on cashew nuts subsector but the result will be generalized to advice
another subsector that have the same nature. The study expected to be very useful to
policymakers on how to set the policy on future agricultural export due to the evidence oriented
recommendation. The study will use time series secondary data from different sources. The
dependent variable will be the volume of agricultural export in Tanzania (Porto, 2005). The Data
of nuts cashew export (1961-2013) will be obtained from Food & Agricultural Organization, UK.
Independent variables will be cashew nuts world market price and Export Output (19612013)
both will be obtained from FAO. The data of currency exchange rate (1961 013) will be
obtained from World Bank. Both statistical and econometric model will be used in quantitative
analysis. In statistical analysis, line and bar graph will be used in the comparison of trends of
macro variable versus agricultural export trend. The method said is the best due to the easiness of
analysis and interpretation. Lastly, the speed of adjustment of macro variables from the short run
to the long run behavior will be estimated after establishing the cointegration (Banerjee et al.,
1993).

An empirical research shows that the world market price may not influence the export and
import trends in the agricultural market. The reason is that demand causes the fluctuation in
prices of any commodity and the demand for agricultural prices never goes down to the bottom
line. In this way the prices in the world market may fluctuate a bit or may show extreme
fluctuations but the overall impact on the imports and exports of the agricultural products
remains consistent and ongoing (Kingu, 2014).

In regard to another research done to highlight the impact of production on improving exports,
the production output is found highly significant for influencing the exporting trends of any
nations. The reason given is pretty simple that when a country has more production, it has more
to sell off and thus the exports increases. The countries work for earning foreign exchange by
increasing exports and by having sufficient agricultural production, their this need is adequately
met. Thus, the overall research reflects that the production has a significant impact on the
exports. The case of Tanzania is almost similar, and thus it has been studied in this research
(Johnson, 1999).
Chapter 3: Research Methodology

This section provides a detailed design of research methodology referring to the ways in which
data has been gathered for the purpose of analysis of research hypothesis. This section
incorporates details regarding population, sampling, data collection and measurement tools used
for analyzing the collected data.

3.1 Research Design

The study comprises of secondary research design under quantitative research methodology. The
responsiveness shown by agricultural export to agricultural output volume, world market price
and currency exchange rates, in case of cashew nut industry is evaluated using data from online
sources. The data is gathered using e-views regarding the study variables. And then the collected
data is analyzed using appropriate research techniques.

3.2 Research Philosophy

There are three most common research theories upon which the researchers keep their study
dependent. It is a considered to be a key concern of researcher to pick the right research
philosophy for its research. These research philosophies are namely: Positivism, Interpretivism
and Realism(Pontoh & Ilat, 2013). In concerned with the current study, Positivism will be most
appropriate in reviewing hidden facts and information about social and organizational realities in
a logical and scientific approach. The research will provide realistic findings to the
responsiveness shown by agricultural export to agricultural output volume, world market price
and currency exchange rates, in case of cashew nut industry.

3.3 Research Approach

A method undertook for studying the research topic and then conduct the research can be termed
as a research approach. There are mainly two ways of doing the current research, namely,
inductive and deductive research approach. Inductive approach is when research moves from the
particular to the general which means observing some patterns and proving the hypothesis.
However, the deductive method is when research moves from general to specific i.e. a set of
observations are made from literature. On the basis of observations, hypothesis are designed
which are tested using T-test in multi regression analysis (Pontoh & Ilat, 2013). Out of the two
approaches, the researcher can precede the current study by utilizing deductive research
philosophy. Application of the deductive approach will intend to develop data on the
responsiveness shown by agricultural export to agricultural output volume, world market price
and currency exchange rates, in case of cashew nut industry.

3.4 Time Horizon

The strategy applied to the collection of data from online sources is according to the feasibility.
The collection of data is done by the researcher, who acquires one week for searching the
relevant agricultural data from the e-views. And then an extended time period of 20.25 days is
spent in accumulating the final values needed to measure the responsiveness of agricultural
Export Output export to the production volume, market prices, and currency exchange rates.

3.5 Sample

The sample size is selected as 53 years data, from 1961 2013, of agricultural Export Output,
production volume, world market prices and currency exchange rates. The tenure of 53 years is
selected because the research aims at providing truthful results by observing the trend shown by
data in past these years.

3.6 Data Collection

Data is collected from the online sources regarding agricultural Export Output, production
volume, world market prices and currency exchange rates using e-views. The data is collected
for the time period of 53 years i.e. from 1961 2013. Data regarding study variables is extracted
from e-views to conduct the research analysis.

3.7 Statistical Technique

The technique used for the analysis of data is descriptive statistical technique because its used to
measure differences or associations between variables. The descriptive technique is conducted to
give the description of the characteristics of the targeted population which is being measured or
studied. This technique describes the collected data and it also helps to systematize and analyze
the collected data.
To analyze the data collected there is a need to select the appropriate statistical technique that
will provide truthful and adequate results to test the hypothesis and to answer the research
questions. The statistical techniques identified in the study to analyze the collected data are
descriptive statistics, Pearson Bivariate Correlation Matric, and Regression Analysis. Pearson
Bivariate Correlation Matrix demonstrates the relationship between dependent and independent
variable in the form of a matrix. Thus, the strength of the relationship between agricultural
Export Output and production volume, world market price, and exchange rates will be illustrated
by correlation matrix. The regression analysis will identify the strength of the impact of the
independent variable on the dependent variable. It gives a percentage value that reflects the
variation caused in dependent variable due to all independent variable. Furthermore, it helps
identifying the strength of overall model by conducting F-Test. It mainly describes whether or
not the overall model is a good fit. In order to test the designed hypothesis, T-test will be
performed which will result in either the acceptance of hypothesis or its rejection.

The regression model used in the research to quantify the impact of independent variable on the
dependent variable is as follows:

Y = + X1 + X2 + X3 + i

In this equation, Y represents the dependent variable while X is the independent variable. The
beta gives a numeric value that quantifies the extent of relationship between both variables while

i
is the measure of undertaking chances of occurrence of error in the data set. This will be

interpreted as one unit variation in Y is caused due to given units of independent variable.

LnAGEXP = + ( LnAP ) + ( LnWPAP ) + ( LnER ) + i

In this equation,

LnAGEXP = agricultural export of cashew nut industry,

LnAP = agricultural Export Output volume

LnWPAP = World market price of agricultural product,

LnER = Currency Exchange rate

= intercept

i = Error Term

3.8 Statistical Tool

The collected data is analyzed by using the tool i.e. SPSS version 19 (Statistical package for
social sciences). The data is analyzed by means of different statistical techniques with the help of
SPSS tool.

3.9 Future Scope

Analyzing the extent of responsiveness shown by agricultural export to production output, world
market price and exchange rates in case of cashew nut industry will surely help extracting some
useful conclusions that will provide agricultural sector of Tanzania and its cashew nut industry to
enhance the efficiency of their performance by optimizing production and exports. The
agriculture sector is selected as it is one of the rapidly growing industries that never lose its
worth in regard to livelihood and trade.Furthermore, the findings of this research will be
applicable in extracting same relationship in the same sector in different regions of the world.
Further, the project topic has been chosen to spread awareness about this subject so that people
become more aware of the benefits of agricultural exports. There were few limitations of time
constraints, difficulty in finding data and conducting data analysis. If these limitations could have
been resolved, then the results of the research would have been more accurate. However, current
results are also adequately collected and interpreted. Therefore, new researches can also rely on
this research to their base paper.

3.10 Ethical Concerns

It is essential to follow ethics in research because the primary focus of the research is to provide
true results obtained from the respondents. To avoid any unethical misrepresentation of the
research, the data is collected using the most suitable instrument and methodology. In
quantitative research, the data is collected suing online sources via e-views. The data collected is
analyzed using the most appropriate techniques that are multi regression analysis and Pearson
correlation analysis. The reasonable ways of interpreting the data will be taken into account
while analyzing the results gathered from the web sources. It is ensured that there will not be any
misrepresentation of data. The results will be plotted the way they are collected without any
manipulation. This will help getting the true and exact interpretations based on truthful data. The
research will thus provide quality findings to the research topic. Further, a set of
recommendations will be suggested to the cashew nut industry in order to enhance the progress,
profitability and overall performance based on the findings extracted from the research data
analysis.
Chapter 4: Results & Analysis

This chapter will cover the data analysis of collected and collated data set. A detailed analysis
will be conducted by running appropriate tests on the data set. On the basis of results gathered
from the statistical software, useful interpretations will be derived. This chapter will also
interpret the acceptance and rejection of hypotheses designed.

4.1. Descriptive Statistics

Descriptive Statistics

Std.
N Minimum Maximum Mean Deviation

LnAGEXP 53 17060.00 160000.00 77337.8868 36373.09619

LnAP 51 4197.00 156000.00 64966.9608 37705.06752
LnWPAP 51 131.65 1374.51 555.6253 310.86210
LnER 53 7.02 1600.44 423.2204 534.93494
Valid N 51
(listwise)

Interpretation

The descriptive statistics table shows the mean and standard deviation of each variable. The data
set comprises of values of agricultural Export Output in cashew nut industry, its production
volume, exchange rate and world market price. The data set contains information about 53 years
which are arranged listwise, and the descriptive analysis is run. The mean values show the
average Export Output, average production volume, average world market price and average
exchange rate in these 53 years. The mean value for Export Output is 77337.88, for production
volume is 64966.96, for global market price is 555.62 and for exchange rate are 423.22.
however, the standard deviation shows how much variation do the Export Output, production
volume, world market price and the exchange rate has shown in the time period of 53 years i.e.
from 1961 2013. The values of standard deviation for Export Output are 36373.09, for
production volume is 37705.06, for world market price is 310.86 and for exchange rate are
534.93.
 4.2. Pearson Bivariate Correlation Matrix

Correlations

LnAGEX
P LnAP LnWPAP LnER

LnAGEXP Pearson 1 .759** -.139 .424**

Correlation

Sig. (2-tailed) .000 .329 .002

N 53 51 51 53

LnAP Pearson .759** 1 -.148 .196

Correlation

Sig. (2-tailed) .000 .299 .169

N 51 51 51 51

LnWPAP Pearson -.139 -.148 1 .578**

Correlation

Sig. (2-tailed) .329 .299 .000

N 51 51 51 51

LnER Pearson .424** .196 .578** 1

Correlation

Sig. (2-tailed) .002 .169 .000

N 53 51 51 53

**. Correlation is significant at the 0.01 level (2-tailed).

Interpretations

The table shows the values of correlation between dependent and independent variables. The
value of is taken as 0.01 against which the observed p-values of study variables are compared.
We accept the alternate hypothesis and reject the null hypothesis when p-value is less than. On
the other hand, if the p-value is greater than, then the null hypothesis is accepted, and the
alternate hypothesis is rejected.

The correlation between Export Output and production volume is 0.759. This shows that Export
Output of cashew nut industry is strongly positively correlated with production capacity. The
value of is taken as 0.01 against which the observed p-values of study variables are compared.
The p-value observed is 0.000 which is less than 0.01 thus we accept the alternate hypothesis that
states that there is a significant impact of agricultural production volume on the agricultural
Export Output in case of cashew nut industry of Tanzania.

The correlation between Export Output and world market price is -0.139. This shows that Export
Output of cashew nut industry is weak negatively correlated with world market price. The value
of is taken as 0.01 against which the observed p-values of study variables are compared. The p-
value observed is 0.329 which is greater than 0.01 thus we reject the alternate hypothesis and
accept null hypothesis that states that there is no impact on world market prices on the
agricultural Export Output in case of cashew nut industry of Tanzania.

The correlation between Export Output and exchange rates is 0.424. This shows that Export
Output of cashew nut industry is moderately positively correlated with exchange rates. The
value of is taken as 0.01 against which the observed p-values of study variables are compared.
The p-value observed is 0.002 which is less than 0.01 thus we accept the alternate hypothesis that
states that there is a significant impact of currency exchange rates on the agricultural Export
Output in case of cashew nut industry of Tanzania.
Correlation Summary

Correlation
Hypotheses Interpretation
Value
H1: There is a significant impact of production volume of Strong or
0.759
agricultural growth on the agricultural Export Output in case Significant
= 75.9%
of cashew nut industry of Tanzania on Correlation
H2:There is a significant impact of agricultural world market Weak or
-0.139
price on the agricultural Export Output in case of cashew Insignificant
= 13.9%
nut industry of Tanzania. Correlation
H3:There is a significant impact of currency exchange rates on Moderate or
0.424
the agricultural Export Output in case of cashew nut Significant
= 42.4%
industry of Tanzania. Correlation
 4.3. Multi Regression Analysis

Model Summary

Model Summary

Model

R R Square Adjusted R Square Std. Error of the Estimate

dimension0 1 .797a .636 .612 21397.25496

a. Predictors: (Constant), LnER, LnAP, LnWPAP

Interpretation

The table shows the model summary of the data in which the values of R, R-square, and
Adjusted R Square are interpreted. The value of R shows the overall correlation between the
dependent and all independent variables. The value of R in the table is 0.797 which means that
there exists 79.7% correlation between dependent and all independent variable. In other words, it
is interpreted that agricultural Export Output by cashew nut industry is 79.7% correlated with
production volume, world market price, and exchange rates. Thus, a strong overall correlation is
found between the study variables.

The value of R square reflects the extent of variation caused by dependent variable due to all
independent variables. The of R-square in the table is 0.636 which means 63.6% variation in the
dependent variable is caused due to all independent variables. In other words, it is interpreted
that 63.6% variation in agricultural Export Output is caused due to production volume, world
market price, and exchange rates.

The value of Adjusted R square shows the overall strength of the model. The value of adjusted R
square is 0.612 which shows that the overall model is 61.2% strong. Thus, it is interpreted that it
is overall a strong model.
ANOVA

ANOVAb

Model Sum of
Squares Df Mean Square F Sig.

1 Regression 3.753E10 3 1.251E10 27.327 .000a

Residual 2.152E10 47 4.578E8

Total 5.905E10 50

a. Predictors: (Constant), LnER, LnAP, LnWPAP

b. Dependent Variable: LnAGEXP
Interpretation

The above ANOVA table illustrates the overall models Goodness of Fit. In the table, total data
is categorized into two divisions. One is regression, and the other is residual. Regression consists
of the part of data which is explained by regression while residual represents the unexplained
part. If regression is greater than residual than the data set is considered to be a good fit. The
values of Regression and Residual in the table are 3.753 and 2.152 respectively. These values
show that Regression is greater than Residual, which means that the model is a good fit as a
more significant portion of the model is explained by regression while the part unexplained is
less. Therefore, it can be interpreted that overall model is a good fit.

F-Test

In F-test, if the value of F observed from the table is greater than F critical value which is
observed from the universal table for F values, then it is interpreted that overall model is a good
fit. In the same context, the significance value, also known as p-value, is also observed to test
goodness of fit. If the p-value observed from the table is found less than the, which is taken
0.01 in this research, the again the interpretation derives states that overall model is a good fit. In
this way by observing the F values, we either found the goodness of fit or we found our model,
not a good fit.
The observed value of F is 27.327 in the above table while the critical value of F is 3.933. On the
other hand, the p-value observed is 0.000 and is 0.05. This shows that the value of F observed
is greater than F critical value and p-value is less than. Therefore, it is interpreted that the
overall model is a good fit.
Coefficients

Coefficientsa

Model Unstandardized Standardized

Coefficients Coefficients

B Std. Error Beta T Sig.

1 (Constant) 40789.442 9281.612 4.395 .000

LnAP .605 .087 .664 6.990 .000

LnWPAP -24.745 12.616 -.224 -1.961 .056

LnER 22.171 8.059 .317 2.751 .008

a. Dependent Variable: LnAGEXP

Interpretation

The above shows the values of and of respective independent variables. These values are
used to solve the regression equation that indicates the unit of variation caused by dependent
variable due to independent variables.

Y = + X 1+ X 2 + X 3

LnAGEXP = + ( LnAP ) + ( LnWPAP ) + ( LnER ) + i

LnAGEXP=40789.4+ 0.605 ( LnAP )24.74 ( LnWPAP ) +22.17 ( LnER )

By plotting all the values in the formula, it can be interpreted that:

One unit increase in Export Output of cashew nut industry of Tanzania is caused due to
0.605 unit increase in production volume
One unit increase in Export Output of cashew nut industry of Tanzania is caused due to
24.74 unit decrease in world market price
 One unit increase in Export Output of cashew nut industry of Tanzania is caused due to
22.17 units increase in exchange rate
Hypotheses Testing

T-Test

In t-test, if the value of t observed from the table is greater than t critical value which is observed
from the universal table for t-values, then the null hypothesis gets ejected, and alternate
hypothesis gets accepted. In the same context, the significance value, also known as p-value, is
also observed to test the hypothesis. If the p-value observed from the table is found less than
the, which is taken 0.01 in this research, the again null hypothesis gets ejected, and alternate
hypothesis gets accepted. In this way by observing the t values, we either accept the null
hypothesis which always show that there is no impact on study variables or we accept the
alternate hypothesis which represents the relationship between dependent and independent
variables.

T value observed for Production volume is 6.990, and the critical value for t is 1.63. This
shows the p-value observed is greater than the critical value. On the other hand, the p-
value (0.000) for Production volume is less than the (0.01). Therefore, the H1 gets
accepted which shows there is a significant impact of production volume of agricultural
growth on the agricultural Export Output in case of cashew nut industry of Tanzania.

T value observed for world market price is -1.961 and the critical value for t is 1.63. This
shows the p-value observed is less than the critical value. On the other hand, the p-value
(0.056) for world market price is greater than the (0.01). Therefore, the H0 gets
accepted which shows there is no impact of agricultural world market price on the
agricultural Export Output in case of cashew nut industry of Tanzania.

T value observed for exchange rates is 2.751, and the critical value for t is 1.63. This
shows the t-value observed is greater than the critical value. On the other hand, the p-
value (0.008) for Production volume is less than the (0.01). Therefore, the H1 gets
accepted which shows there is a significant impact of currency exchange rates on the
agricultural Export Output in case of cashew nut industry of Tanzania.
T-Test Summary

Hypotheses Values Interpretation

H0:There is no impact of agricultural production volume on
the agricultural Export Output in case of cashew nut
industry of Tanzania. p-value < Reject H0
H1:There is a significant impact of agricultural production (0.000 < 0.01) Accept H1
volume on the agricultural Export Output in case of
cashew nut industry of Tanzania.
H0:There is no impact of agricultural world market price on
the agricultural Export Output in case of cashew nut
industry of Tanzania. p-value > Accept H0
H2:There is a significant impact of agricultural world market (0.056 > 0.01) Reject H1
price on the agricultural Export Output in case of cashew
nut industry of Tanzania.
H0:There is no impact of currency exchange rates on the
agricultural Export Output in case of cashew nut industry
of Tanzania. p-value < Reject H0
H3:There is a significant impact of currency exchange rates (0.008 < 0.01) Accept H1
on the agricultural Export Output in case of cashew nut
industry of Tanzania.
 4.4. Assumptions of Ordinary Least Square

Autocorrelation

Model Summaryb

Model Durbin-Watson

dimension0 1 1.213a

a. Predictors: (Constant), LnER, LnAP, LnWPAP

b. Dependent Variable: LnAGEXP
Interpretation

Autocorrelation is another error indication that exists when errors are correlated with one other.
Durbin-Watson Statistics is used to check the occurrence of autocorrelation. If the value of
Durbin-Watson lies below 2.5, then it means that there is no autocorrelation. From Table, the
value of Durbin-Watson is observed 1.213 which meets the criteria. Therefore, it can be
interpreted that no autocorrelation exists in the data set. This satisfied the first assumption of
ordinary least square
Multi-collinearity

Coefficientsa

Model Collinearity
Statistics

Tolerance VIF

1 LnAP .859 1.164

LnWPAP .595 1.680

LnER .585 1.708

a. Dependent Variable: LnAGEXP

Interpretation

The table shows the results of multi--collinearity check. Multicollinearity is the chances of
occurrence of an error in the data. If independent variables in the data are linearly related, then
there are the chances of the existence of multicollinearity in the data. To check this error, two
measures are used: Variance Inflationary Factors (VIF) & Tolerance Factor (Tol). The error of
Multicollinearity exists when the value of VIF is below 10 and near to 1, and when the value of
Tol is near to one and greater than 0.5.

The observed values of VIF from the table are 1.164 for production volume, 1.680 for world
market price and 1.708 for exchange rate while the observed value of Tol from the table are
0.859 for production volume, 0.595 for world market price and 0.585 for exchange rate.This
shows that values of VIF for each independent variable are below ten and near to one. Also, the
values of Tol are near to one and above 0.5 in every independent variable. Therefore, it can be
interpreted that multicollinearity does not exist in the data set. This satisfied the second
assumption of ordinary least square
Normality of Errors

Interpretation

Normality of errors exists when errors from multiple regressions are normally distributed. To
check normality of errors, there are two approaches: Histogram of Residuals and Normal
Profitability Approach. I have used both approaches to check the normality of mistakes. In the
first approach, the histogram should be bell-shaped. In the figure above, the shape of the
histogram is bell-shaped which indicates normality of mistakes. Thus, the third assumption is
also satisfied
Normal Probability Plot

Interpretation

In the figure above, the regression line is represented by the straight line while the dots represent
the observations in the data set. In this assumption, the distance between the dots and regression
line should be least. The dots lie closer to the regression line that shows that the third assumption
is satisfied.
Heteroskedasticity

Interpretation

The Heteroskadicity exists when errors have non-constant variance. When data shows a scattered
plot with all the values scattered then there is no heteros kadi city in the data. In the figure above,
the values are scattered. Therefore, it can be interpreted that there is no heteros kadi city in the
data set. Thus the fourth and last assumption of ordinary least square is also satisfied.
Chapter 5: Discussions & Conclusion

This chapter deals with the discussion on overall research by throwing light on the results
comprehensively. The results found in this research are compared with previous researches to
strengthen the feasibility of this research. On the basis of detailed discussion, conclusions are
derived which precisely covers the findings of the research and provide overall inference.
Further, this section provides recommendations for improvement of the agricultural sector as a
whole and also states the potential limitations that were profound in this research.

5.1. Discussions

The research primarily focused on exploring the responsiveness of Agricultural Export Output to
Export Growth, Currency Exchange and World Price: Case Study of Cashew Nut Industry. In the
research, agricultural Export Output is kept as dependent variable while the agricultural export
growth, currency exchange rates, and world market price are studied as independent variables.

The results show that agricultural Export Output of cashew nut industry shows high
responsiveness in case of export growth volume. This is because when the production volume
increases, it shows that the demand for agricultural Export Output is enhanced in the world
market. Frequent sale and purchase are experienced in the season of high production volume. In
such circumstances, it becomes beneficial for the industry to work for high profits and to get a
high contribution in the world market. Thus, the Export Output of cashew nut industry increases.
The impact of production volume is found positive on the agriculturalExport Output, which
represents that with the increase in export growth volume the Export Output also increases and
vice versa. Same results are shown by the previous researches for instance research shows that In
regard to another research done to highlight the impact of production on improving exports; the
production output is found highly significant for influencing the exporting trends of any nations.
The reason given is pretty simple that when a country has more production, it has more to sell off
and thus the exports increases. The countries work for earning foreign exchange by increasing
exports and by having sufficient agricultural production, their this need is adequately met. Thus,
the overall research reflects that the production has a significant impact on the exports. The case
of Tanzania is pretty much similar, and thus it has been studied in this research (Brenton, 2008).
The results show that agricultural Export Output of cashew nut industry show weak or no
responsiveness in case of world market prices. This is because even when the world market
prices decrease, the Export Output of the cashew nut industry does not stop. Rather it keeps its
Export Output on a consistent level to meet the needs of demand in the world market.It shows
that the demand for agricultural Export Output is not effected much by the fluctuation in the
world market prices. Frequent sale and purchase are experienced even when the prices go high.
In such circumstances, it becomes beneficial for the industry to work for high profits and to get a
high contribution in the world market. Thus, the Export Output of cashew nut industry remains
constant. Moreover, the impact of world market price is found negative on the agricultural
Export Output which represents that with the increase in world market prices, the Export Output
decreases and vice versa but on a very minimal proportion. Same results are shown by the
previous researches, for instance, empirical research shows that the world market price may not
influence the export and import trends in the agricultural market. The reason is that demand
causes the fluctuation in prices of any commodity and the demand for agricultural prices never
goes down to the bottom line. In this way the prices in the world market may fluctuate a bit or
may show extreme fluctuations but the overall impact on the imports and exports of the
agricultural products remains consistent and ongoing (Brooks, 1989).

The results show that agricultural Export Output of cashew nut industry shows high
responsiveness in case of currency exchange rates. This is because when the currency exchange
rates become favorable for the home currency then the trade is encouraged by the world market.
This happens when the exchange rates of home currency become strong than other currencies. In
such state, the Export Output of cashew nut industry s enhanced as the sales will proceed on
same rates but due to strong home currency the profits will tend to increase. The frequent sale is
experienced in the season of strong home currency rates. In such circumstances, it becomes
beneficial for the industry to work for high profits and to get a high contribution in the world
market (Gorter, 2014). Thus, the Export Output of cashew nut industry increases. The impact of
currency exchange rates is found positive in the agricultural Export Output, which represents that
as the home currency becomes stronger then the Export Output also increases and vice versa.
Same results are shown by the previous researches, for instance, a study demonstrates that all the
circumstances have been a part of agricultural history of Tanzania but the factor that has most
influenced the progress of agricultural industries in Tanzania are the currency rates. Similarly, the
exchange rates significantly impact the agricultural exports but on a small scale. This is why
because when a country gets its stronger over other currencies, its presence in the world market
is highlighted. The exports are increased to earn more foreign exchange. This not only improves
one sector of the nation but enhances the overall economy by improving the balance of payments
(Assem & Hatab, 2010).

On the whole the findings of the research show that there a significant responsiveness is shown
by the agricultural Export Output to the export growth, currency exchange and world market
price in case of cashew nut industry of Tanzania. Thus in is interpreted that the overall findings
of the research show that there is significant responsiveness shown by the agricultural export
growth in response to agricultural production output volume, world market price, and currency
exchange rates.

5.2. Conclusion

The research primarily focused on exploring the responsiveness of Agricultural Export Output to
Export Growth, Currency Exchange and World Price: Case Study of Cashew Nut Industry. In the
research, agricultural Export Output is kept as dependent variable while the agricultural export
growth, currency exchange rates, and world market price are studied as independent variables.
The research comprises of quantitative research methodology in which secondary data is
collected for evaluating the results. The data for the research is collected using e-views. The data
for the study variable is collected for a time lapse of 53 years i.e. from 1961 2013. The data
gathered is collated using statistical package for social sciences (SPSS) software version 19.00.
The data collated is analyzed by applying the tests of Pearson bivariate correlation matrix and
multi regression analysis. To interpret the results, three individual hypotheses were designed to
test the responsiveness of agricultural Export Output for each independent variable. The overall
results indicate that agricultural Export Output in case of cashew nut industry shows significant
responsiveness for currency exchange rates and production volume. However, a weak
responsiveness is observed in the case of world market prices. On the whole the findings of the
research show that there a significant responsiveness is shown by the agricultural Export Output
to the export growth, currency exchange and world market price in case of cashew nut industry
of Tanzania.
 5.3. Recommendations

There are few recommendations suggested to the cashew nut industry to enhance its Export
Output, based on this research project. The suggested recommendations are as follows:

The cashew nut industry should increase its Export Output when the exchange rates
increase as it results in high profits for the organization as a whole
The cashew nut industry should increase its Export Output in the season of high
production volume as it will result in frequent sales of Tanzania in the world market
The world market prices seem to have no impact on the Export Output strategy of cashew
nut industry. Therefore, it should not refrain from its sales even if world market prices
fluctuate abruptly.

5.4. Limitations

Even though the research provides actual and truthful results regarding the study variables, yet
there are seen some limitations in the research which are as follows:

Tanzania has many industries working for agricultural Export Output, but this research is
limited to case study of cashew nut industry only

Due to time constraints, it was difficult to study more than one industry in this research

Data collection is highly time-consuming and difficult task which makes this research
limited to one industry only.
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