Abstract
The study uses a computable general equilibrium (CGE) approach to simulate the welfare gains of
improving trade and transport services in Tanzania up to the year 2015. The model takes into
account the regional differences in trading margins and the different production patterns of
commercial and subsistence producers. The results show that substantial economic growth can be
achieved by alleviating the existing bottle necks in marketing. The regional growth patterns of
production after market improvement favour the more isolated and often poorer regions, leading to
decreased regional inequality over time. The main beneficiaries of the policy change are the rural
poor whose income grows faster than the income of the wealthier urban dwellers. The results
suggest, that if sufficient resources and political commitment to improving trade and transport
sectors can be mobilised, the economic performance can be enhanced to reach the Millennium
Development Goals by 2015.