Capital and labour productivity the leather Industry in Tanzania (1977-1981)

Tanzania is at the extensive stage of development where the rate of growth of the economy has to be accelerated so as to maximise utilisation of domestically available resources increase output to meet first and forest domestic demand and secondly have surplus for ex ort to earn foreign exchange and at the same time generate greater labour absorption capacity, she is thus striving hard to attain maximum development within the frame work of her natural endowments and benevolent international goodwill expressed in aids and technical assistances. Through a number of policies she has managed to chart out a path of development based on public ownership of the major mea s of production. The 1967 Arusha Declaration policy of nationalisation with compensation moved the ownership the major means of production from private hands to public ownership and thus laid the cornerstone of socialist transformation The economy has experienced steady change in its industrialization strategies. It started with import substitution industrialization strategy. This strategy rather than alleviating the alleviating the balance of payment problem , as ideally designed to do , intensified it and thus called for another strategy. Agricultural raw material processing industries and other export oriented industries were therefore emphasized so as to export processed final products and earn more foreign exchange. Launched in the Third Five Year Plan is the Basic Industrial Strategy which aims at establishing industries which produce basic intermediate inputs into other industries and in so doing consolidate the Industrial development. The leather industry has been specified as one of the basic industries which must be developed. The future development of the Tanzanian economy will greatly depend on exploration and development of its resources, allocation and utilization of its factors of production and their productivity in generating national wealth. Given the growing investments in the industrial sector and the central role of this dynamic sector in increasing the productive capacity of the economy it becomes clear from the on-set that the question of labour and capital productivity in the industrial sector is crucial and must be given a priority in the agenda of national issues. The most important aspect on the question of factor productivity is the analysis of the basis for its improvement. How can output per unit of input be maximized?