The Importance Of Tanzania Joining International Trade Economics Essay

The Importance Of Tanzania Joining transnational switch over Economics EssayThe valet de chambre race has become dynamic which armaments countries around the world to quite a little interchangeably. As both differentwise country, Tanzania has seen the importance of joining worldwide Trade by identifying slipway and means of navigating through with(predicate) with(predicate) a viable and steady lead towards warlike export-led begetth for the realisation of the conclusion of privation eradication.In mark for Tanzania to grow it needed to increasingly engage in the orbicular handicraft trunk and draw benefits from inclusive globalization, in particular mellowed(prenominal) scotch branch and poverty reduction.Table of Contents1.0 IntroductionTanzania is situated on the eastern hemisphere coast of Africa. Tanzania which involves the islands of Zanzibar and Pemba became indep endingent in 1961 with a per capita GNP of US$ 210 the prudence is essentially leechl ike on agriculture. Tanzania is matchless of the worlds least developed countries.From liberty in 1961 Tanzania followed a neighborlyist model of stinting victimisation. This essentially non- commercialise surface precedeed in the nationalization of businesses and industries and the collectivization of agriculture. Over time the failures of this st prisegy became unornamented as the thrift stagnated and suffered signifi crumbt setbacks.Since 1985 Tanzania has go acrossed a series of stinting reforms but progress has been inconsistent. However since 1995 the pace of reform has accelerated and Tanzania has cerebrate on macro frugal stabilization and fiscal reform supported by outside(a) financial institutions.Tanzanias stinting consummation was expected to remain gruelling in 2008. GDP addition for 2008 was estimated at 7.5 per penny, up from 7.2 per cent in 2007 and an improvement betwixt 2002-2006 period when the deliverance grew by an average of 6.0 per cent. fre sh maturation has mainly been attributed to construction, tourism and mining. Economic reforms have been name return drivers and have transformed the economy from a relatively controlled maven to one that is liberalized and mart-driven.Inflation has remained in single digits and averaged 5.0 per cent per annum from 2000-2006 but shot up in 2008 and is expected to edge over 9 per centin 2008, as a result of the globally luxuriously food and give the axe prices. The current account deficit was forecast to stay at active 13 percent of GDP imputable to higher imports as a result of strong sparing activities and a construction boom.Tanzanias main trading partners ar the European Union, Japan, India, and Kenya. Tanzanias exports are primarily agricultural commodities much(prenominal) asCoffeeCashew nutsTobaccoCotton constituting the largest heavenssImported intersections are as followMachineryTransportation equipmentIndustrial raw materialsConsumer unafraids constitute the maj or portion.Because of the decrease in agricultural mathematical product during the past few years, ascribable to climatic conditions, food and foodstuffs imports have increase sharply. Tanzania is a net importer of service.Dar es Salaam is the commercial capital and major sea port for Tanzania Mainland and it serves beside land-locked countries of Ma rectitude of naturei, Zambia, Burundi, Rwanda, and Uganda, as closely as Eastern DRC. other sea ports include Zanzibar, Tanga, and Mtwara. Because of its geographical and location advantage, Dar es Salaam Port presents itself as the doorway into East and Central Africa.Furthermore, this renders Tanzania as a logical investment terminus for investors.This maneuvers clearly that Tanzania can participate good in tidy sum wind activities by integrating with other African Countries.2.0 Statement of the ProblemTanzania Integration with Africa Trade form _or_ system of regime manikin3.0 Objectives of the StudyThe objectives of the study are as followsTo indicate how Tanzania can integrate with African countries to be able to help International Trade.To determine the major issues that can be improve to make Tanzania decorous the web of Africa in International Trade.African Trade Policy Frame flirtCountry firms are supposed to compete establish on still comparative advantages, and bleak manage maximizes both national and internationalistic welfare. improve challenger is assumed, grocery place place failures do non exist, and trade serves no other purpose other than that of cost-efficient convince of goods and services to maximize mortal and collective welfare. In this world, the pattern of trade would be determined altogether by comparative costs whereby the about efficient producers would supply the worlds requirements and the market mechanism would be the sole determinant of prices. If bare(a) trade economists command the world, there would be no trade policy. This is because autono mous trade repose is unequivocally good for the liberalizing country lede eventual(prenominal)ly to global free trade. In this world there would be no trade treaties, non trade negotiations and no World Trade Organization.Economic history shows that governments over generally create and maintain distortions in the pattern of trade for reasons they recollect more valid than the economists sole criterion of efficiency. Since the Second World War, trade policy has increasingly been dispersed at four major levelsBy national governmentsCommodity-based cartelsRegional blocksMultilateral institutionsOften the politics of policy designs pulls in opposite circumspections. For character, while the multilateral arrangements ( divers(a) General Agreements on Trade and Tariffs, GATT and the late(a) World Trade Organization, WTO, rules) as well as the prescriptions under the geomorphological Adjustment Programmes (SAP) by the World Bank and the IMF push hard towards free trade regimes, n ational politics often opts for security departmentism. While multilateral rules via WTO foster negotiated but complete liberalization, regional and national pressures are towards preferential and selective liberalization. What often emerges as the trade policies for individual countries are often the result of a remnant (contestation) of office among the competing power blocks interior(prenominal) help politics delinquent to interest group pressure versus external demands tied to external obligations to regional arrangements and international institutions. The policy content, in recognition of the tension, tries to marry both the economic and political arguments.Trade policy in Africa has been no exception to these tensions between economics and politics. Though with differences in scope and intensity, trade policies in most African countries have generally followed a discernible pattern mark by the prevalence of restrictions on trade.Tanzania Trade Policy FrameworkPolicy is a statement of intent for achieving an objective. Deliberate statement sustained at achieving particularised objective policies are formulated by the establishment in order to provide a guideline in attaining certain objectives for the benefit of the muckleVISION, MISSION AND OBJECTIVES OF TRADE POLICYThis trade policy responds to and builds upon the inherent economic reforms that have been under implementation since the mid 1980s, and to unfolding events in the international economic scene.These k directlyledges call for a systematic and consistent approach in the application and use of trade policy instruments in the abut of create a competitive economy and striving for higher rates of result. From the internal perspective, the policy draws upon the uncreated goal of the National Development Vision 2025, emphasising on poverty reduction and its ultimate eradication. In order to address the line of work of poverty, it is inevitable to attain and sustain a minimum G DP yield rate of 7% which in turn requires a minimum rate of 14% for trade growth.This highlights the importance of the international dimension in trade expansion strategies. Hence, from the international perspective, the policy draws upon unfolding changes in the MTS and emerging opportunities which can contribute immensely to the process of attaining and sustaining the high rates of economic growth that underpin strategies for poverty eradication.3.1 TRADE POLICY VISIONThe character of the trade orbit towards the realization of the national goal of poverty eradication forget be attained through the structural re recental of the economy and heighten productivity that exit in turn contribute to the process of international competitiveness and lead to rapid economic growth.Vision is to transform the economy from a supply constrained one into a competitive export-led entity antiphonary to leavend domestic integration and wider participation in the global economy through natio nal trade liberalization.3.2 MISSIONTrade is not an end in itself but a means for achieving higher welfare to society, than would be possible without trade. The function of the trade sector, then, is to integrate the Tanzanian economy into the global economy through trade. This entails structural transformation of the national economy, and product/market diversification. Indeed, to sustain an economic growth rate above the 7% required for the achievement of the goals of National Development Vision 2025 depends on exploitation a advance(a) export-led economy. High volumes of exports are essential to achieve the goals of Vision 2025. Sustaining a high growth rate is a necessary but not sufficient condition for poverty eradication. Growth has to be complemented by broad-based gibe opportunity of access to the primary assets of exertion land, fosterage and finance for such(prenominal) growth to be translated into poverty eradication. The mission of the trade sector is therefore to hassle the discipline and growth of trade through enhancing competitiveness aiming at rapid socio-economic development.OBJECTIVESIn accordance with the National Development Vision 2025, the goal of trade policy is that of natural elevation efficiency and widening linkages in domestic takings and building a diversified competitive export sector as the means of stimulating higher rates of growth and development. quintuple specific objectives emanate from and reflect this goal.The first specific objective is to stimulate a process of trade development as the means of triggering higher performance and capacity to withstand intensifying competition within the domestic market. This includes the establishment of improved physical market-place infrastructure and stimulating dissemination of market information and increasing access to the market.The second objective involves economic transformation towards an integrated, diversified and competitive entity capable of participating e ffectively in the MTS.The terce objective entails the stimulation and go onment of value-adding activities on primary exports as a means of increasing national earnings and income feed ins even on the understructure of existing output levels.Fourth is the stimulation of investment flows into export point areas in which Tanzania has comparative advantages as a strategy for inducing the origin of technology and innovation into production systems as the basis for economic competitiveness.The 5th objective is the attainment and maintenance of long-term current account balance and balance of payments through effective utilization of complementarities in regional and international trading arrangements as a means of increasing exports combined with initiatives for higher efficiency in the utilization of imports.The ultimate target is to parent income generation and the peoples meaning power at the grass-roots level as the key to poverty reduction in fulfillment of the fundamental h uman right of able opportunity for all citizens as enshrined in the constitution of the United res publica of Tanzania.CONSTRAINTS AND CHALLENGES FOR TRADE POLICYTanzanias trade performance within a shrivel domestic market, in an increasingly liberalising economy that is converging with a intensify global market, is a source of concern. The essence of impediments against the growth and expansion of Tanzanian trade flow lies in supply-side constraints. The success of the envisaged trade development strategies depends on prioritising the implementation of measures addressing the totality of supply-side constraints.These constraints extend across the entire commodity/product value chains from production through processing and delivery to the consumer and comprehend the full range of supporting services involvedFrom the perspective of globalization the same constraints assume the feature of two fundamental requirements the need for raising the nonpublic sectors capacity to compete and ensuring that benefits from the unfolding opportunities are accessible to broader segments of the society. self-made resolution of these demanding multidimensional constraints depends on prior determination of fundamental premise underpinning the development of production capacities including increasing access to the means of production and inherent challenges.The major fundamental premises and challenges include establishing and sustaining an change business surround development of hard and soft infrastructure building capacity for market supporting institutions creating the internal ability to participate in and influence changes in the world trading system and progress of close sector development in the mise en scene of supply-side capacity.ENABLING POLICY ENVIRONMENTThe fundamental role of government is in providing the enabling policy environment that will drive the unavowed sector in becoming the engine of economic use and growth through efficiency and soften perf ormance.The Tanzanian political sympathies is already implementing a policy entailing its withdrawal from direct involvement in economic activity to facilitate channelling of its resources in the conventional area of establishing and maintaining a contributive and enabling policy environment.Four categories of measures are involved in the process of creating an enabling environment good governing stability of the macro-economic framework heavy and regulatory framework reforms and efficient economic regulation and competition policy. licit GovernanceConstraints and ChallengesGood governance is a pre-condition for development entailing the existence of a combination of tangible and intangible attributes and functions of the government machinery. The intangible attributes refer to the well functioning of the state coupled with the institutional capacity to maintain peace, constabulary and order create an atmosphere of tranquillity and confidence for investment meet individual li berty and equality before the law ensure protection of property and fair delivery of commercial justice and provide fair to middling checks and balances in the exercise of power including transparency and predictability in public decision-making.For example the ongoing socio-political and economic reforms including broadening popular participation of the people in economic and political processes, and entrenching security of people are intended to enhance good governance. Likewise, major public and hole-and-corner(a) sector investments in social and physical infrastructure aim at strengthening the capacity for efficient delivery of services necessary for competitive economic activities. However, its efficiency is hampered by a weak institutional framework for enforcement and execution. strategyThe authorities is go along with the implementation of measures aimed at strengthening its capacity to maintain good governance as its cardinal mandate including promotion of self-regulati on through introduction of codes of conduct. Other measures will include extensive public awareness campaigns and moral eyeshot targeting public and private sector active involvement and participation in good governance.Macro-economic Policy EnvironmentConstraints and ChallengesOne of the prerogatives for attaining and sustaining high rates of economic growth is the establishment of an attractive, stable and predictable macro-economic environment for increased flow of investment and trade. This rests on the implementation of appropriate monetary and fiscal policies such as lowering and controlling inflation and the stabilization of interest and exchange rate Also it requires increased liberalisation of the operations of the financial, commodity and hollow markets. In the sociopolitical sphere the observance of good governance, maintenance of peace, the rule of law and enhanced efficiency in the delivery of goods and services are of overriding importance.StrategyThe judicature wi ll continue with the implementation of measures aimed at sustaining a conducive macroeconomic policy environment in its entirety as the basic condition for stimulating economic growth through increased investment and trade expansion.The Government will continue to strengthen its institutional and supervisory capacity for this purpose. This entails building a national consensus on the direction of fundamental macro economic policy variables combined with a metric change in the culture of government service towards increasing reactivity to the needs of the business community.Legal and regulatory FrameworkConstraints and ChallengesThe establishment of an enabling business environment entails a process of continuous adjustment of the good and regulatory framework violationing on the performance of the business sector. Despite economic reforms sustained since the mid-eighties, there are still residual impediments that lead to high transaction costs. This discourages the inflow of for eign and domestic investment and hinders efficient trade sector performance. The envisaged court-ordered and regulatory reforms seek to lower transaction costs, enhance business compliance and improve efficiency and competitiveness.The ultimate objective of legal and regulatory reforms is to protect the interests of consumers through enhancing the capacity of government institutions to perform their regulatory functions efficiently and by maintaining regulations only where they are necessary for this objective.StrategyThe Government is expediting measures to stimulate international competitiveness through(a) Reduction of unnecessary bureaucratic procedures that lead to high transaction costs for the business sector(b) Facilitating and supporting(a) the development of private sector capacity to participate more effectively in the process of better regulation through public-private sector partnerships and improved advocacy.(c) Expediting the establishment of market-supporting instit utions in the area of better regulation to ensure co-ordinated legal and regulatory reforms and improvement of commercial justice delivery.Economic Regulation and disceptation PolicyConstraints and ChallengesCompetition policy addresses the problem of concentration of economic power that can arise from market imperfections, monopolistic behavior in economic activities and consequent restrictive business practices.Restrictive business practices primarily have-to doe with the consumer through either higher prices and unacceptable quality standards or limitations on the availability of goods and services.Competition policy aims at perpetuating freedom of trade, freedom of pickaxe and access to markets. Competition law is a component of competition policy prohibiting firms from engaging in anti-competitive behavior and abuse of dominant market position. The ultimate objective of economic regulation and competition policy is to protect the consumer through control of monopoly behavior on the part of producers.Tanzania has enacted three laws to govern competition and regulation of economic activity the good Trade Practices telephone number of 1994 the power and Water Utilities Regulatory Act(EWURA) of 2001 and the Surface and Marine Transport Regulatory Act (SUMATRA) of 2001. The SUMATRA Act also amends the Fair Trade Practices Act to establish the Fair Competition Commission (FCC) in place of the Fair Trade Practices Bureau. The mandate of these Acts is limited to the regulation of natural monopolies in the utilities and communication theory sectors and does not cover activities in the social and economic sectors.StrategyThe Government is expediting the implementation of Competition law under the co-ordination of the FCC and related regulatory institutions and promotes consumer protection through broad-based public awareness on consumers rights and obligations.Human Skills DevelopmentConstraints and ChallengesThe pattern of human capital as a major factor o f production is increasingly assuming importance. The development of human capital from the perspective of developing economies entails focusing on four factors basic nutrition, reproduction, health and protection against economic vulnerability.The level of access to formal reproduction and technical skills in leading sectors is the determinant factor in human skills development. A relatively high level of education to a large segment of the population and good training in the different aspects of the economic environment and the trade development function are the pre inevitables for a happy trade regime. The experience of the new Industrializing Countries (NICs) shows that the process of economic transformation was underlined by quality universal primary education, enrolment ratios higher than 25 per cent in lowly education and an average of 10 per cent enrolment ratio in tertiary and university education.Data for Tanzania indicates the magnitude of the task involved in the e ducation sector in terms of raising the scope and outreach of secondary and university education to levels necessary for the realization of the goals of Vision 2025. For instance, at 6% the ratio of secondary educate enrolment is the lowest in SSA. Performance in skills development and flank services has also remained below expectations and requirements with respect to production practices in key sectors particularly agriculture, tourism and small-scale mining.The level of skills is relatively low compared to other regional economies due to low enrolment ratios in formal education at the secondary and tertiary levels and curtailed training in production and value-adding activities for workers in key economic sectors. The pace of economic transformation in Tanzania depends on the rate at which society can absorb and assimilate mod production skills and technologies in areas where the nation has advantages in resource endowments.The importance of education and skills is crucial to the perception of technology as theyencompassing better production and delivery techniques and practices rather than mechanization. At the sametime the legal framework prevailing in the labor party sector contributes to the pace of development of an adequate pool of hot labour. Existing labour laws retain the tendencies of a command economy characterized by lack of flexibility in hiring practices and over-protection of employees, and limited linkage between performance and remuneration.The daunting task of expansion of the outreach of the education sector in Tanzania is extremely constrained by the implications of demographic features including the concept of demographic transition and the incidence of HIV/AIDs. Demographic transition refers to the rate of change of the rates of line of descent and death. The essence of the concept is that developing countries experience rapid population growth and changes in its dependency ratio. While the death rate has been declining, the rat e of stemma has been rising resulting in the increase in the dependency ratio.HIV/ help has become a major health problem as well as a serious impediment to socio-economic development through its impact in the reduction of the active labour force, in particular the human capital that underpins economic transformation, higher productivity and competitiveness.StrategiesEducationWith respect to education, the Government had planned to raise primary education enrolment ratio to 85% by the end of 2002 and increase the rate of transition from primary to secondary education from 15% prevailing since 1998 to 20% by 2003. Emphasis had been displace on training in business education and entrepreneurship at various levels of the education system. This thrust and tempo will be maintained in the medium and long term as a strategy to bridge circuit the gap in the outreach of the national education system.TrainingWith regard to skills development and production techniques top priority will be a ccorded to extension services for agronomic and animal husbandry practices in agriculture where the highest potential for growth based on wide linkages across sectors prevail. This will include promotion of irrigation based on traditional and modern practices and mechanized soil as far as possible. The Government will also initiate measures to fetch better packaging and delivery practices in direct response to market expectations and demands. The Government will take measures to contribute to market linkage programmes that aim at stimulating trade development through product and market diversification based on introduction of new product and new processes for value-adding activities.Labour lawsThe Government is reviewing prevailing labour laws and regulations to induce the evolution of labour practices that conform to market practices that link merit, efficiency and productivity to rewards and flexibility in employment to reflect the principles of free entry and exit into industry . Labour law reforms will adhere to obligations from the International Labour Organisation. The Government will implement social sector policies aimed at the development of human capital through creation of a large pool of trained and trainable labour force as the base of structural transformation of the economy.HIV/AIDS The government will implement a broad-based strategy of raising awareness on the scourge of HIV/AIDS and the incidence of demographic transition and encourage change in social behavioral patterns. Towards this end, emphasis will be placed on the instruments of moral persuasion and social responsibility based on accountability and self-determination rather than laxity and social tolerance as the key to stimulating change in cultural patterns, attitudes and habits. in the long run increasing accessibility to income generating activities for socially vulnerable groups will be one of the pillars to address the problem. head-to-head arena DevelopmentThe private sector is now formally recognized and accepted as the producer of goods and lead supplier of services for the domestic and export markets and consequently the leading employer and primary vehicle for poverty eradication. The thrust of socio-economic reforms undertaken since 1995 highlights the determination to build a vibrant private sector for this purpose.StrategyThe Government is developing a Private Sector Development Strategy (PSDS) to ensure broad-based and inclusive participation in production and trade and will expedite its adoption and implementation. The strategy entails the establishment of an enabling business environment through better regulation increased private sector access to capital including titled-land, education, skills and entrepreneurship as well as purvey of business support services in management, production and marketing.Institutional strength BuildingInstitutional capacity building amongst the key public and private sector stakeholders in the trade policy pr ocess is the key to successful implementation. Performance in public institutions, including the Ministry of Industry and Trade (MIT) and its supporting agencies, and in business sector associations that serve the private sector, such as the Tanzania Private Sector Foundation (TPSF), Confederation of Tanzania Industry (CTI) and Tanzania Chamber of Commerce, Industry and agriculture (TCCIA), reflects major cultural and operational weaknesses, often associated with the mind-set. These include lack of proactive initiative in identifying and addressing problems, low analytical capacity, low commitment to work and poor co-ordination. There is evidence of lack of appropriate experience to amend or repeal obsolete laws and make better and simpler regulations to facilitate enforcement on the part of the public sector, and lack of analytical capacity to advocate for requisite change on the part of the private sector.StrategyThe Government will undertake capacity building needs assessment to identify institutional complementarities and gaps. Priority will be accorded to private sector capacity for psychoanalysis and advocacy in influencing policy formulation and implementation. Twinning of indigenous institutions with overseas counterparts will be explored and utilized to facilitate rapid movement along the learning curve.Transformation of Production CapacityAgriculture remains the headstone of the Tanzanian economy with over 80 per cent of the population dependent on this sector. It remains a source of employment to 75 per cent of the population, contributing 50 per cent to GDP and about 70 per cent of export earnings. Leaving the economy dependent on traditional agriculture, which in turn is dependent on the whims of nature and fluctuating terms of trade, makes the path of development unstable and unpredictable. Success of this trade strategy in the context of the goal of Vision 2025 depends on strategies for the transformation of agriculture.The revival of the ag ricultural sector is constrained by lack of support to facilitate technology diffusion for modern agronomic practices to raise productivity and slow response by foreign investment culminating in stagnation in the development of the private sector and agribusiness.Specific constraints include limited access to extension services, inputs and book of facts facilities necessary to stimulate product diversification weak market linkages due to poor infrastructure and lack of market knowledge and information necessary to facilitate market diversification.There is need to modernize production practices in the designated lead sectors of mining and tourism and other priority sectors such as industry and transit trade. Such modernization depends on application of modern technology on the national resource base. Enhancing competitive value-adding capacity in these sectors is the key to transformation of economic activity.StrategyThe Government will range measures for agricultural transformat ion through implementing the Agricultural Sector Development Strategy (ASDS) of 2001. One priority aspect is to ensure a net-inflow of resources into the sector to facilitate transformation of production technologies through wider research and dissemination of research results and better extension services. The government will also encourage investments in commercial farming and agro-processing industries as growth poles of the sector through out-grower and contract farming schemes and other market linkage relationships.Other measures include the promotion of industrialisation through investment in Export Processing Zones (EPZs) and Industrial Parks. The Government will also encourage the channelling of investment resources to non-traditional sectors, in particular