Advanced Research in Economics and Business Strategy Journal
Volume 6, Numéro 2, Pages 196-210
2025-12-31

Governance Distance As A Catalyst Of Trade: Insights From Tanzania’s Exports To Sub-saharan Africa



Authors : Shio Richard . Suphian Robert . Masanja Cosmas .

Abstract

This study investigates how governance distance affects Tanzania’s exports to the sub-Saharan Africa (SSA) countries. The study is based on the new institution economics and augmented gravity model. The Poisson Pseudo-Maximum Likelihood (PPML) estimation is used to analyse panel data from 2002 to 2023. The study used the fuzzy index to compute the governance similarity index based on the worldwide governance indicators (WGI). The results reveal that closer alignment of governance dimensions to Tanzania by the SSA country fosters Tanzania’s exports, confirming that governance similarities reduce transaction costs and expand trade. Gravity model variables such as the GDP of Tanzania and SSA counties had a positive effect on exports, and distance had a negative effect on trade as anticipated. Thus, policymakers should strive to improve Tanzania’s governance quality, reduce governance distance with developed countries, and improve Tanzania’s global exports.

Keywords

Governance distance ; Governance similarity ; Worldwide governance indicators ; Export performance ; Sub Saharan Africa ; Augmented Gravity Model

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