This book shows that feasible, low-cost, sharply focused policy initiatives aimed at enhancing private investment could launch Tanzania on a path to competitive light manufacturing.

This book shows that feasible, low-cost, sharply focused policy initiatives aimed at enhancing private investment could launch Tanzania on a path to competitive light manufacturing.

This book argues that light manufacturing can offer a viable solution for Sub-Saharan Africa, given potential competitiveness based on low wage costs and an abundance of natural resources that supply raw materials needed for industries.

This book argues that light manufacturing is appropriate for a resource-based country like Zambia. While Zambia's recent growth has been impressive, it has not been accompanied with adequate job creation. Long-term job creation in copper production is very small; links to the rest of the economy tend to be weak as well. Besides, the development of natural resources tends to discourage job-creating sectors such as manufacturing. To be sustainable and to create productive employment for its people, growth needs to be accompanied by structural transformation. Such transformation entails a growing share of manufacturing output in the economy. In the past, Zambia's efforts to promote and facilitate industrial growth have not been very successful. Policy regimes swung from one extreme to another. In the 1980s, Zambia put complete control of the industrial sector in the hands of the state. When this model proved unsuccessful, policy shifted in the opposite direction in the 1990s, and all earlier government interventions were lifted. Neither extreme led to sustained growth of manufacturing. This book suggests an alternative: directing government policies toward removing constraints in a few of the most promising light manufacturing sectors using practical and innovative solutions inspired by the fast-growing Asian economies whose starting point 20 years ago was not very different from Zambia's today. This book has several innovative features. First, it provides in-depth cost comparisons between Zambia and four other countries in Asia and Africa at sector and product levels. Second, the book uses a wide array of quantitative and qualitative techniques to identify key constraints to enterprises and to evaluate differences in the performance of firms across countries. Third, it uses a focused approach to identify country- and industry- specific constraints. It proposes market based measures and selected government intervention to ease these constraints. Fourth, it highlights the interconnectedness of constraints and solutions. For example, solving the manufacturing input problem requires actions in agriculture, education, and infrastructure. The book shows that Zambia has the potential to become regionally competitive in several light manufacturing subsectors by leveraging its comparative advantage in natural resource industries such as agriculture, livestock, and forestry. Interventions include both the provision of public goods and the removal of existing policy distortions in the economy. Growing production of light manufacturing goods would allow Zambia to capture more value from its raw materials and create more jobs.

Recent growth accelerations in Africa are characterized by increasing productivity in agriculture, a declining share of the labor force employed in agriculture and declining productivity in modern sectors such as manufacturing. To shed light on this puzzle, we disaggregate firms in the manufacturing sector by size using two newly created panels of manufacturing firms, one for Tanzania covering 2008-2016 and one for Ethiopia covering 1996-2017. Our analysis reveals a dichotomy between larger firms that exhibit superior productivity performance but do not expand employment much, and small firms that absorb employment but do not experience any productivity growth. We suggest the poor employment performance of large firms is related to use of capital-intensive techniques associated with global trends in technology.

An investigation into the place of agriculture in the economy of Tanzania.

This volume examines key policy challenges facing Tanzania over the coming decades in the areas of agriculture, trade, urbanization, employment, finance, and natural investment.

The study builds on lessons from Tanzania's development experience of the past four decades, with emphasis on the period following the 1996 Country Economic Memorandum, which focused on the challenge of reforms, in particular the impact of reforms on growth, incomes, and welfare in the country. The study assesses Tanzania's current development status against the country's ambition, since independence, to rid the nation of three archenemies: poverty, ignorance, and disease. Structural transformation has been extremely limited, with agriculture still dominating the economy, a non-diversified economy that hampers flexibility to withstand shock occurrences. Nonetheless, the country intensified macroeconomic policy reforms, significantly stabilizing the economy, with falling inflation levels, climbing foreign exchange reserves, and an overall fiscal balance. But the main factors identified behind the slow development progress, are primarily inadequate capital accumulation, and productivity growth; poor support for the transformation of agriculture; disrupted progress in building human capital; and, delayed demographic transition. However, the steady progress in reorienting its economy to a market-based operation, is creating space for exploiting the large potential of private sector initiative. It is emphasized that growth will only be sustainable, if firmly rooted in exploiting the domestic resource base, international competitiveness, and an aggressive pursuit of new export opportunities. -- Publisher description.

This is an open access title available under the terms of a CC BY-NC-SA 3.0 IGO licence. It is free to read at Oxford Academic and is offered as a free PDF download from OUP and selected open access locations. This book investigates the performance of firms and households in Tanzania and the strategies they adopt to navigate shocks, achieve sustainability, and build resilience in order to sustain their growth and development. The contributions take into account competitiveness and productivity for firms, and income or welfare for households. Has the ability to navigate successfully through shocks and a changing economic environment improved over the past two decades? What are the lessons for managing and recovering from shocks, such as the COVID-19 pandemic? Chapters cover a range of issues including competitiveness and value chains as determinants of (export) trade performance and the importance of technology, innovation, linkages, and value chains for the resilience and sustainability of firms. Trends in household income diversification and rural livelihoods, and improvements in financial inclusion, particularly through digital financial innovations such as mobile money services, promote the resilience and sustainability of households. Gender and regional, especially urban-rural, differences are incorporated. Cross-cutting themes emerge: the need for modern technology and infrastructure to increase the productivity and employment of firms; the role of investment in human capital in reducing gender inequalities and equipping workers and entrepreneurs with relevant skills; and the importance of access to resources for innovation. The performance of Tanzanian firms has gradually improved since 2000 - although many challenges remain - and this has benefitted households through employment opportunities; the COVID-19 pandemic was however a significant shock to the economy and progress stalled or reversed as a result. Tanzania, like many countries, faces a challenging future but is better positioned to do so than it has been.