Policy, institutional structure and performance of the cotton-textile industry in Tanzania
Date
2001-11
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Abstract
The cotton-textile industry is an important activity m Tanzania's economy as source
of employment, contribution to exports, contribution to GDP and clothing the
population. The sector has been significantly influenced by policy changes, from a
regime of controls, regulations and confinement dominant prior to 1986 to a free market
regime thereafter.
Despite the importance of this sector, it faces many problems at all three levels:
cotton production, ginning and manufacture of textiles.
Performance at the three levels has been poor in recent years despite pursuance of
policies designed to improve performance. The main factors explaining this poor
performance are related to macroeconomic policies - pricing, availability of financial
services, price of utilities, increased competition from imports, e.t.c.
Prior to liberalization, the cotton-textile chain was closely coordinated and
supervised. After liberalization, the coordination network collapsed, leaving the three
activities "every one to oneself". This has brought high costs in terms of resource
allocation e.g. mismatch between (low) actual production of cotton and excessively high
capacity in ginning.
The policy implication is that reliance on macroeconomic policies alone is
unhealthy. Instead translation and linking such policies to realities at the sectoral and
micro levels are more important.
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Keywords
TANZANIA, COTTON INDUSTRY, TEXTILE INDUSTRY, TRADE LIBERALIZATION, ECONOMIC POLICY, INDUSTRIAL POLICY, PRODUCTIVITY, PRODUCT DEVELOPMENT