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I 1 INTRODUCTION TPhe economi c developmen t o f Tanzania , fro m independenc e i n 196 1 unti l now, has been characterized by a series of internal and external shocks that have tested the resilience o f the economy, th e stability o f it s institutions, and the tolerance and inventiveness o f its people. Despite the fact that Tanzania is one of the world's poorest countries (the fourth-poorest, accordin g to the 199 0 World Bank Development Report), it has managed to weather all storms with a remarkable degree of political stability, and without extreme hardships such as the famines that hit other, more-developed countries. The beginning of the decade of the eighties found the Tanzanian economy in deep economic crisis, resulting from a sequence of policy responses and a series of externa l shock s that , accordin g t o man y observers , worsene d a n alread y critical situation. Recognizing the impossibility of dealing with the crisis alone, the government sought external assistance from multilateral donors, such as the International Monetary Fund (IMF). The conditions imposed by theIMF were at first strongl y resiste d o n the ground s tha t they woul d und o al l th e socia l an d distribution gain s tha t ha d bee n achieve d b y Tanzani a sinc e independence . However, attempt s by th e governmen t t o implemen t it s ow n stabilizatio n an d adjustment programs largely failed, with the result that in 1986 the government of Tanzania agreed to a three-year package of measures and policy reforms as a 1 2 Alexander H. Sarris and Rogier van den Brink condition fo r multilateral an d other donor assistance. Th e initial progra m ha s been succeede d b y anothe r progra m tha t starte d i n 198 9 an d i s stil l bein g implemented. There are deep controversies surrounding the acceptance and implementation of externally or internally imposed policy reforms in Tanzania, which date from the en d o f th e seventies . The y concer n th e necessit y o f reforms , th e typ e o f policies adopted, the effectiveness of various measures in reviving the economy, and the impact of reforms on various segments of the population. The purpose of th e presen t repor t is , first , t o outlin e th e mai n structura l feature s o f th e Tanzanian economy, especially those relevant to the crisis, and second, to deal with the last of the above-mentioned aspects of the reform debate, especially the impact of previous policies and current stabilization and adjustment measures on the poorer segments of the Tanzanian population. Underlying all policy refor m programs tha t are recommended a s remedie s t o an economic crisis—whic h i s usually manifeste d i n a persistent , larg e balance-of-payment s deficit—i s th e belief that the major reasons for the crisis lie with "wrong" policies previousl y adopted, whose modification will correct the fundamental structura l disequilibria . Whethe r thi s wil l happe n depend s o n th e structur e an d respons e o f th e economy t o variou s signals , o n th e degre e o f implementatio n o f th e state d reforms, and on the effectiveness of the new policies in changing the established structures o f politica l an d economi c institutions . Muc h o f th e debat e o n th e effectiveness an d impact o f adjustmen t programs—an d Tanzani a i s n o exception —has been driven by ideologica l biase s rathe r than detailed analysis . Our effort i n this report will be to contribute to the understanding of the functioning of th e Tanzania n econom y an d it s peopl e durin g th e crisi s an d unde r polic y reforms, without invoking ideological arguments. Our emphasis throughout will be on economic structure and behavior. Given the short period over which reforms have been in place in Tanzania, it is difficult to evaluate impacts , unless one understands how various parts of the economy are interrelate d an d function . I t is i n the sam e manne r that...


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