The Role of Livestock in the Tanzanian Economy: Policy Analysis Using a Dynamic Computable General Equilibrium Model for Tanzania

In agricultural economies of Africa, livestock sub-sector supports livelihoods of large proportion of households and has important role on value addition and on insuring national food security. However, its importance has often been ignored by policymakers as well as researchers. Researchers neglect livestock sector mainly for methodological reasons. This study tries to overcome this problem. We extend an existing DCGE model for Tanzania with a separately built herd dynamics module which enables us to specify stock–flow relationship, distinguishing between the capital role of livestock and the flow of livestock products. The results from realistic TFP shocks on different agricultural sub-sectors clearly show that livestock sub-sector has better growth elasticity greater than the cereal and cash crop sub-sectors in contrast to previous literature. Factors reallocation among activities is observed which leads us to emphasize on livestock – cereal sub-sectors joint growth plan rather than cereal sub-sector growth alone