Browsing by Author "Mazungunye, Panashe Paul"

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    Industrialisation for economic transformation : economy-wide impacts of agro-processing development in Tanzania
    (Stellenbosch : Stellenbosch University, 2020-03) Mazungunye, Panashe Paul; Punt, Cecilia; Stellenbosch University. Faculty of Economic and Management Sciences. Dept. of Agricultural Economics.
    ENGLISH SUMMARY : Economic development has generally been viewed as a process of economic transformation. In countries where this economic transformation does not take place, socio-economic challenges prevail. Success in virtually all developed countries has been associated with diversification of the economy through industrialisation, particularly manufacturing expansion. In Tanzania, industrialisation and economic transformation are still to take place as they did not fare well in the past. Labour moving out of agriculture has mainly been absorbed in services and informal sectors that are not as highly productive as manufacturing. Agriculture still accounts for the majority of the economy’s employment and has a substantial share in output and exports. The contribution of manufacturing activities in the economy has remained limited. As a consequence, the current high economic growth rate has not been matched with quality jobs and rapid growth in incomes and thus poverty has remained high. The government has identified the need to transform the economy through expansion of agro-processing activities to create the much-needed jobs and incomes. The study reviewed that the prevailing conditions in the Tanzanian economy support the need for agro-processing activities. The activities have the potential to lead the process of economic transformation. A number of challenges, however, limit the expansion of the agro-processing in Tanzania and will need to be addressed through industrial policy. Against this background, the study examined the economy-wide impacts of agro-processing expansion in Tanzania. The investigation was done through simulating the impacts of policies aimed at improving productivity in agro-processing, expanding export markets for agro-processed products, increasing the quantity of educated labour, and increasing agricultural production to support the expansion of processing activities. The study used the International Food Policy Research Institute’s recursive dynamic computable general equilibrium model for the simulation analysis. The model which was calibrated to a 2016 Tanzania social accounting matrix was best suited for the analysis as it provided the impacts over a longer period of time. The findings suggest that agro-processing activities play an essential role in the Tanzanian economy and hence the government should continue to implement policies to encourage more investments in the sector. Productivity increases in the agro-processing sector are important for enhancing the sector’s production and competitiveness which leads to increased exports and import substitution of agro-processed products. Policies such as attracting FDIs to improve productivity should thus be encouraged. Export push strategies will boost exports but without improving the sector’s production capabilities, growth will slow down. On the other hand, horizontal policies such as increasing education may not necessarily be sufficient for the sector’s expansion but are crucial for the expansion of the whole economy. Productivity increases in agricultural activities will also be crucial to expand the input base for agro-processing activities. The simulation analysis also highlights that policy outcomes among the subsectors within the agro-processing sector may differ. Thus, policies must be targeted at the subsector level. In addition, it is also important to note that different policies that can expand the agro-processing sector have different implications on factor and household incomes.