A FRAMEWORK FOR DESIGNING A STRATEGY

FOR GROWTH AND DEVELOPMENT

Professor Joseph Semboja

Executive Director

REPOA

INTRODUCTION

• Importance of equitable growth is recognised for development; see Vision 2025, MKUKUTA, Mini-tiger plan,..

• Current growth trends high but not adequate to achieve income poverty targets of Vision 2025 and the MDG

• Therefore, need to develop strategy for accelerating and sustaining growth

OUTLINE OF THIS PRESENTATION

1. Makes the case ( gives “rationale”) for an overriding coherent strategy that provides direction for resource mobilization and concentration of efforts

2. Outlines criteria for identification of growth drivers

3. Discusses enabling support that may be needed in implementing the chosen strategy

RATIONALE FOR A NEW STRATEGY

• Resources are limited; need to determine a clear direction for concentration of efforts; targeting activities and key actors for capacity building

• Need for :– alignment and consistency of different policies and

strategies– Focus on interventions that show strong synergies

between themselves; and signals to other actors– Focus on high pay-off policies and actions (scale,

employment, poverty reduction)

DEVELOPING A STRATEGY

• First requirement: an agreed development vision. Vision 2025 exists.

• Then, interpretation of the Vision – by linking available resources and markets to identify

the country’s growth drivers

• Tanzania is part of the global environment, as a market and a production centre. Therefore growth drivers must be based on the country’s comparative/competitive advantages

Determining Comparative and Competitive Advantage

• Comparative Advantage: ability to produce (domestically) and deliver (to markets-local and global) relatively cheaply; based on naturally available resources

• Competitive Advantage- not based on naturally available resources. Rather on

elements of competitiveness such as productivity, quality, diversity and innovation that arise from accumulation of new and more sophisticated set of resources. This requires medium and long term development of capacity in a country .

Implications

In the short to medium term Tanzania may need to: – focus on comparative advantage, as we strive to

develop areas of competitive advantage in the future– The country’s comparative advantage is derived

from its natural resource base namely, from its • strategic location (transport and logistics),• geological (minerals) resources • ecological (horticulture) conditions, and • bio-diversity and landscape (tourism)

Implications of Comparative Advantages

Comparative advantage not derived from:• Cheap labour- due to low productivity levels.

Hence human resource can not be a source of comparative advantage

• Extensive agricultural land- agriculture is no longer driven by land and unskilled labour; rather by knowledge and innovation; a reminder that comparative advantage is a dynamic concept- can be gained and lost

• Manufacturing- has always been driven by knowledge and innovation

Criteria for Selecting Growth Drivers

Criteria (once areas of comparative advantage have been identified) include:– High pay-off in terms scale, job creation and poverty

reduction– Strong synergies and complementarity

(reinforcement) with each other and with the other sectors

– Potential for developing competitive advantage in the medium term. Geographical location is a good example- short to medium term targets landlocked neighbours and links with other sectors; medium to long term linkage with the rest of the global market especially Asia and the Middle East

Policy ImplicationsMay lead to concentration or clustering of investments

in specific geographical areas.This is not bad for growth; large concentrated investments lead to high aggregate employment, income and spending; selective ‘growth pole’ policy is good for pro-poor growth as people follow opportunities

The enabling policy environment needs to be more specific to address identified constraints to the chosen growth drivers; in addition to overall enabling environment, there may be need for selective protection or strategic choices of social services and investment (beyond basic provision) to reinforce the drivers of growth

Sound analytical and technical inputs are needed to drive the development of a clear growth strategy; strong political signals in favour of an analytically driven growth agenda have to be given

CONCLUDING REMARKS

• The presentation aims to initiate discussions: it proposes a framework not conclusions; more work needs to be done, especially in the selection of growth drivers

• The presentation recognises that all sectors of the economy matter for growth. However, there is a difference between growth drivers and complementary growth areas

• The choice of appropriate growth drivers is likely to shift the discussions away from ‘sector’-based to multi-sector based; away from short term to long term benefits

• Remember: comparative advantages can be gained and lost