Intensity of Integration
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The economy of Tanzania mainly depends on agriculture which accounts over 50% of its GDP. The country exports includes coffee, cashew nuts, maize, cotton, tobacco leaves pulses and sisal. At the same time, it imports cereals and refined sugar. According to research done by FAO, 43% of the population is undernourished which places the country prone to food insecurity than the sub Saharan Africa average which stands at 33 per cent.
In the process of enhancing economic growth and development, approaches such as trade linearization has been introduced, removal of trade regimes and price controls. These economic reforms are aimed at enhance small hold productivity from the agriculture as well as the enterprises from the private sector. Tanzania trades mostly with the European Union and Asia. These accounts 24 to 29 % of its total imports whereas its exports accounts 38 to 32% of Tanzania’s exports. The GDP of East African community accounts 6 to 7 % of its trade flows.
It’s very clear that Tanzania’s import rates have decline from 1969. Tanzania’s imports have been on high demand but have been financed through international borrowing and external assistance. The country’s earnings from exports were able to finance 1/3 of the countries imports, but from 1997 there has been declining evidence in terms of earnings and exports. The exports declined from $764 to $ 603 million from 1969 commodities from agriculture accounting for 70% and 15% accounted for manufactured products. Therefore, constraints to trade growth and expansion in Tanzania are: low capacity in production, inadequate technology, and insufficient economic and physical infrastructure. All these factors have limited Tanzania ability to increase its market share in the world markets.
When we look at Tanzania’s trade in services, we focus on the countries sale and delivery of intangible products, or services between producer and consumer. Tanzania trade in services GDP was 16.68% in 2009. This was according to reports from the World Bank in 2010. This was simply the sum number of exports and imports all that divided by GDP value in US dollars. Tanzania’s GDP per capita is one of the lowest in the world. Despite the fact that the country has vast number of natural resources, 85% of its economy is supported by agriculture which employ 80% work force. A less developed country remains active to GATS negotiations. Liberalization plays a key role in Tanzania’s services in competition between goods and services sector. At the same time this increases the efficiency of export opportunities and service sector. Negotiations on trade both in bilateral and regional are on high agenda, these are being conducted mostly between Tanzania and the European Union.
According to Tanzania’s’ trade in services, it can be concluded that tourism, communication, health, education and communication are the priority sectors for Tanzania. These are the most promising sectors for Tanzania’s future economic growth. If transport can be given a key role to facilitate in the development process in its position as a transit route for the neighbouring states where most of them are land-locked, this would make it stand at a higher level in comparison with most developing countries.
Foreign direct investment refers to the investment inflows with the aim of acquiring a lasting management interest. Tanzania latest FDI in US$ was 433441900 which later fluctuated to $935520600 from 2010. It’s clearly noted that Tanzania FDI has been fluctuating compared to most African countries which although has been fluctuating at some other years it picked up.
In the recent years the government of Tanzania has been encouraging FDI through incentives creation and procedural investment reduction. This helped the FDI inflows to expand from $474 million which comprised 3.3% GDP up from $447 which was the highest among east African communities. In conclusion it’s clear that Tanzania receives low remittance compared to other sub-Saharan countries. Although Tanzania once had the highest FDI in east African communities, the leading countries now are Kenya and South Africa.
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