Over the course of the 20th century,
Several possible factors have been blamed for contributing to current hardships, such as Julius Nyerere’s failed attempts to collectivize agriculture between 1961 and 1975 through his socialist Ujamaa policies as the first president of
Another factor contributing to current hardships in
In truth, however, history should not be blamed as the only reason for the current situation, nor can it be changed. Instead, identifying and improving current causal factors should be focused on more. There is strong evidence suggesting that Tanzania is poor because first, it lacks a solid system of government regulation; second, the country experiences severe credit market failures; and thirdly, the development of human capital is alarmingly weak.
The first major reason for
A major strand in the poor regulation by the Tanzanian government is corruption. The current President Jakaya Kikwete and Former President Benjamin Mkapa made distinct efforts to investigate and alleviate corruption within the government. The National Framework on Good Governance, written in the late 1990s by Tanzanian authorities aimed at a “transparent, responsive and accountable” governance system (REPOA 2006). While these movements towards cleansing the government of corruption are important, the incentive to see through the successful execution of policies is just as significant. Cutting down widespread corruption ensures that the government is able to better allocate resources to accumulate labor and tangible capital. In addition, such a focus encourages a solid system of hierarchy and trust, which in turn builds intangible capital.
The existence of credit market failures is the second major reason for
Probably the most significant implication of this weak credit market is its effect on
The final reason for poverty in
To better understand this idea, one should examine the reasons for poor building of human capital in
In conclusion, it is important to note that according to most sources used in this paper,
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