College of Social Sciences

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Browsing College of Social Sciences by Subject "1970-1980"

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    Domestic credit and balance of payment in Tanzania
    (University of Dar es Salaam, 1984) Kailembo, R
    In the Structural Adjustment Programme (SAP) 1982, Tanzania set increased foreign exchange receipts as one of its major goals for rehabilitation of the economy. This goal entails a reduction in the country's trade deficits and the maintenance of some amount of stability in the balance of payments. The records up to 1981 however show that past payments policies adopted with this aim in mind have not had the requisite effect on the foreign sector. To ensure that the 1982 SAP target is met, therefore, reasons for past policy failures must first be identified and measures taken to counter them. The starting point for such an enquiry should be a comprehensive analysis of Tanzanian balance of payments adjustments, their causes and effects. The novelty of such an analysis would be its inclusion of both monetary and real variables in its study. Most earlier studies of the Tanzanian balance of payments and external sector have tended to concentrate their analysis on real sector changes. Studies by Yaffey (1970), Green, Rwegasira and Van Arkadie (1980), and Hanak (1982) for example, give little or no emphasis to the link between the monetary sector and the country's external account. On the other hand, monetarists such as Johnson (1976) and Frenkel (1978) argue that monetary variables are the key element in balance of payments adjustments. A synthesis of these two main views (real sector and monetary) on how payments imbalances arise might possibly shed more light on the processes generating these imbalances. It could also highlight faults in either of the two approaches which have led to the application of deficient policy measures in the country. As a first step on the road to such a comprehensive study this research sets out to test for the applicability of the monetary approach to the balance of payments in Tanzania. Specifically it tested for the existence of any substantial link between domestic credit expansions and balance of payments deficits incurred by the country. At the same time an attempt was made to improve on the monetary model of payments adjustments by incorporating real variables in the empirical analysis. Data on the balance of payments, money supply and other macroeconomic variables was collected for the period 1968 to 1981. Both qualitative and quantitative methods of analysing the data were then employed. The qualitative study involved a brief survey of developments in the monetary sector and the balance of payments of the country during the 1970s. The quantitative analysis employed econometric methods in which Ordinary Least Squares techniques were used. In this econometric analysis it was found that credit expansions in the country are negatively linked to the balance of payments as hypothesised. In one of the regressed equations the credit variable was also found to be a significant contributor to changes in the net foreign assets position of the country. In the same equation it was found that incorporation of real variables improved the estimates. The main policy implications drawn from the above results were two-fold. Firstly, the central authorities concerned should try to maintain balance between the money supply and demand in the country. This may be achieved through reductions in government bank borrowing and adherence to the credit limits set in the country's Finance and Credit Plans. This aim could also more preferably be achieved through increased capacity utilization in the country so that real output and money demand are increased. Secondly, the authorities should try to formulate comprehensive payments policies to deal with adverse developments in both the real and monetary sectors of the economy affecting the external account. The basis for such policies could be the comprehensive study already suggested.
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    Industrial location in Tanzania: a study of the spatial dimension and decision making.
    (University of Dar es Salaam, 1986) Jambiya, George Leszek Kobelski
    This study in industrial location in Tanzania is based upon the various development plans designated to spread industrial activity and urban centres in the Tanzanian spatial landscape. Generally, the study observes and analyses the process of industrial dispersion since independence in 1961. More specifically it focuses on the three major plans since 1969 and the relevant policies and their spatial implications. On the one hand, the objective of the research is to understand and explain how the various patterns of economic activity related to industry have evolved and developed, and on the other, to understand the manner in which location decisions concerning manufacturing establishments are made in Tanzania. An analysis of the impact of urban and industrial dispersal policies is also attempted. A number of developing countries have sought to transform their economies from agrarian to industrial. Tanzania is no exception to this. In the process, Tanzania has also attempted to transform the space economy it inherited from the colonial era. Although in 1961 the industrial sector was very small, it was limited to a few urban centres and mainly port locations (except for agro-processing industries). Soon after independence, it was realised that if the distribution of industrial activity and urban centres was to follow along this lopsided distribution, existing spatial disparities would be further enhanced. Given the country’s socialist and egalitarian policies, this was an undesirable phenomena. Hence the industrial and urban dispersal policies in the Second and Third Five Year Plans. Inspite of the relatively show pace of industrialization and the numerous bottlenecks facing this sector, there has occurred a limited transformation of the space economy in Tanzania over the last twenty five years. This also applies to the spread of the vital economic infrastructure. As a result of this, only a small number of new industrial centres have emerged in the Tanzanian space economy. This change is not limited to the spatial dimension alone. Changes have also taken place in the structural characteristics of the industrial sector with an increasing share of intermediate and capital goods manufactures. The decision making process of the individual unit is also investigated. On the whole, blanket policies concerning dispersal of industrial activity have been instituted but without due consideration to the special locational requirements of the individual firm. Thus these policies cannot be wholly effective as they pay little attention to the different sizes, forms of ownership and production processes of firms. The conclusions drawn from this study are that over the past two and a half decades there have emerged additional islands of development in the Tanzanian spatial landscape. The degree of industrial concentration in the Primate City of Dar Es Salaam has been decreased slightly. In the major secondary industrial urban centres, there has been a significant increase in industrial concentration. In the remaining areas there is very limited industrial growth. Also of importance is the special relationship between economic infrastructure and industrial location. The poor co-ordination between the relevant planning agencies has been, in part, responsible for the inefficiencies in industrial production and expansion. Of equal importance is the consideration that must be given to the requirements of different types of firms, under different forms of ownership, size and production methods. This special consideration must also engulf the decision making process related to locations, and in turn this would enable planners to create a conducive atmosphere for industrial dispersion. A balance must be struck between spatial equity on the one hand and economic efficiency on the other.
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    The monetary approach to the balance of payments: the case of Tanzania (1966-1982)
    (University of Dar es Salaam, 1985) Shumbusho, Michael Rweyemamu
    The period of the 1970's has been described as the crisis period for the Tanzanian economy. The crisis has been experienced in several ways ranging from falling output; persistent balance of payment deficit; inflationary pressures; growing budgetary deficits; shortage of food, consumerables, and producer goods; declining savings rates; and growing debt burden. Causes of the crisis have been described as those internally and externally generated and their interaction. The major objective of this study is analysing the balance of payment crisis. The available literature in Tanzania concentrates on structuralist approach to the balance of payments. In view of the growing monetary expansion in Tanzania since 1970 the policy of the government to control balance of payments via the Finance and Credit Plan and the Foreign Exchange Plans, and the growing strength of the monetary approach to the balance of payments theory. The current study aimed at analysing the monetary effects of the balance of payments in Tanzania since 1966. The major hypothesis of the study has been that monetary expansion specifically that arising from government credits and private sector credits particularly parastatals, increases import demand via expansion of domestic expenditure.The analysis of money supply inflation, and balance of payments for Tanzania (1966-82) has revealed two important features. First, that past growth in money supply resulted from government and private sector borrowing from the banking systems, while the role of net foreign assets was declining. Since, this was a deficit situation, the declining role of foreign assets reflects a one way sterilization. In view of the fact that a big proportion of private sector credits goes to parastatals, then the public sector can be said to have caused excessive monetary expansion. Secondly as the efforts of monetary expansion were more on inflation and balance of payments than on output growth.. Money supply was seen to affect the balance of payments via government and private sector expenditures. On the basic of theoretical and empirical evidence, an econometric model was set to test empirically the validity of our major hypothesis.The models, though monetary, is not a 'monetarist' approach since it employs both Keynesian and monetarist central assumptions. Results obtained by applying our model to Tanzanian data (1966-81) revealed that in Tanzania monetary expansion had balance of payments purcussions. It was revealed that money affects the balance of payments via private domestic expenditures which together with government expenditures increase the level of imports. It was further revealed by empirical evidence that budgetary deficits influence positively the balance of payments. Money supply is influenced by budgetary deficits private expenditures and foreign trade balance. Thus for the balance of payment policies, efforts should be directed at controlling the government and private expenditures. Policy targets thus should be reducing budgetary deficits foreign trade repurcussion on money supply, and private sector spending specifically the parastatal sector.