Harrod-Domar growth model: emphasizes investment, savings, and technology. More savings->more investment->more technology->more output->higher incomes… cycle. does not consider difficulty in stimulating domestic savings, savings and investments are not neccessarily beneficial for economic growth, or foreign overseas debt.
TANZANIA: this model has not been applied to the Tanzanian economy.
Structural change/dual sector model: Structural change: three stages of production (primary, secondary, tertiary). Dual Sector Model: productivity is key, move more labor to the most productive levels. problems- assumption of stable wage levels, capital flight, shifts labor force.
TANZANIA: this model has not been applied to the Tanzanian economy.
Types of Aid: These include Humanitarian, Bilateral, and Multilateral. Humanitarian is for a specific occurance, it may be from an organization or the governement. It is not a loan, so does not collect interest. Bilateral is a loan from another country, however, special terms of repayment may be agreed upon. Multilateral is when countries all pay into a fund that gives the most needy country money when necessary. These help to overcome the low savings ratios, help reduce foreign exchange outflows, and reduce the dependency on private investment, as well as improve the living standards for poor people, move with the times, not simply provide cheap food, and allow choice to be excercised by the receiving country.
TANZANIA:
- humanitarian aid: Tanzania does receive humanitarian aid to help with many problems including lack of natural resources, refugees, and disease. Contributors include the United Nations and the European Community Humanitarian Aid Department.
- bilateral aid: Tanzania receives bilateral aid from many countries including Finland, Japan, and Ireland.
- multilateral aid: Tanzania also receives multilateral aid, like the IMF.
Export-led growth/outward-oriented strategies: increasing export of goods with comparative advantage->higher incomes->growth in domestic market along side growth in export market. requires-liberalized trade and capital flows, floating exchange rate, infrastructure investment, minimal government regulation and interventions.
TANZANIA: this strategy does seem to be attempted in areas such as the coffee industry.
Import substitution/inward-oriented strategies/protectionism: focuses on domestic production for a good; protectionism against that good being imported, developing the domestic production, and selling the good on world market. problem-likely protectionism put on their good imposed by countries importing the good.
TANZANIA: this strategy does not apply to Tanzania
Commercial loans: foreign direct investment: long-term investment by private Multinational Corporations. loans from banks and other financial organizations to companies and countries helping them achieve development.
TANZANIA: this does apply to Tanzania
Fair Trade Organizations: allow small manufacturers and farmers to get a “fair” price for their product, reasonable profit and revenue for third-world producers.
TANZANIA: Tanzania has fair trade organizations in the coffee industry. These include the Kagera Coffee Union, Thobias Milloni Mushi (farmer), and Ambrose Martin Kimati (farmer).
Micro-credit Schemes: organized by non-governmental organizations, they loan small amounts of money to the poor in developing countries.
TANZANIA: These schemes are used in Tanzania
Foreign Direct investment: this investment often has the involvement of multi-national corporations who bring some of their company’s production to a developing country.
TANZANIA: This is present in Tanzania, particularly mainland Tanzania.
Sustainable Development: economic development and growth that considers ecological factors in how it is achieved.
TANZANIA: While there seems to be some concern for the ecological factors, the dominant interest associated with Tanzania’s economic development and growth is the native people’s well-being.
