| dc.description.abstract | Problem: Tanzania is a dependent underdeveloped country
which relies primarily on the export of primary commodities
to finance her development programmes, with no direct foreign
investment, while other forms of foreign inflow loans and
grants are also limited. Can such a state of affairs lead
to a self-generating and self-sustaining growth? This is
a difficult question, the answer to which requires a broad
study covering all aspects of the national economy. As a
subset of this broad problem, we chose the effects export
instability may have on the economic development of the
country.
Most studies on export instability and economic development utilize cross-country data in cross-sectional analyses
to determine the effects of instability on the economic
development of the underdeveloped countries. Such studies,
however, do not take into account the specific conditions
of each of the underdeveloped countries included in the
study--cultural differences, differences in factor endowments
and socio-political conditions--and as such cannot be
reliably used to explain the effects of instability in such
countries.
Methods Used in Obtaining Data: Part of the data were obtained by the author from
the Central Statistical Bureau--Dar-es-Salaam, Tanzania,
which made available the returns of questionnaires sent out
to various government ministries, parasternal organizations
and several individuals who conduct business related to
foreign trade. The rest of the data were government published
statistics and data from international organization
gathered through library research.
Main Results and Conclusions:
Previous studies, which concluded that export instability
does not have deleterious effects on the economic development of the underdeveloped countries, have been
refuted in this study at least in so far as they refer to
Tanzania. Using time series data from 1954-1973, it was
established that a significant negative relationship existed
between export instability and economic development, especially
as it relates to capital formation, inflation, unemployment, government revenue and expenditure, and peasant incomes.
Export instability was found to be higher in Tanzania
than had been found to be for a group of underdeveloped
countries. On a commodity-by-commodity basis, instability
was even higher for some of the most important export crops
than the aggregate for export earnings.
Though some measures have been devised to deal
with the instability problem, some of them are not without
some drawbacks. National stabilization measures, though
helpful in ameliorating the internal impact of external
shocks, cannot change the level of export earnings because
such levels are determined by forces outside the national
economy. International Commodity Agreements, and especially
the International Coffee Agreement, have not achieved their
objectives. Economic integration in East Africa has been
hampered by economic and political differences between the
neighboring states and by external forces that exploit such
differences to further their own courses.
Reliance on the export of primary commodities has
further been dampened by the fact that the marginal propensity
for the advanced countries to import raw materials has
been declining and is likely to decline still further. The
reason being that, either the raw materials are produced ln
the advanced countries themselves and/or that there has
been a sharp decline in the raw material content of the advanced
countries' manufactures.
For Tanzania, a raw material producing country, a
whole new development strategy is required. What is required
is a thorough ~study of the domestic resource potential
and then, initiation of an industrial programe based
on domestic resources to satisfy domestic needs, where exports
become an extension of the domestic market and at the
same time make a concerted effort at self-sufficiency in
food production | en |
