eco - edited - Country of Choice: United Republic Of...

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Country of Choice: United Republic Of Tanzania Tanzania, as it’s commonly known, in the East of Africa, is one of the poorest countries in the world with a Gross Domestic Product (GDP) per capita of US$ 800. Recently, the annual UN report on poverty revealed Tanzania to be the third poorest in the world. Moreover, its economy heavily depends on agriculture, which accounts for almost 50% of its GDP, provides about 85% of exports and employs 80% of the workforce. However, in recent years, with several banking and other economic as well as social reforms backed by the World Bank and the International Monetary Fund, Tanzania’s economy has grown at an impressive rate. In 2006, the real GDP grew at a notable 5.8%. (The World Fact Book, 2006) Tanzania is in a transition period from a socialist economy to a capitalist economy. Various strategies have been implemented to hand over more powers to the private sector in terms of control and decision making of the allocation of resources, as well as the ownership of business entities and private property. The government has privatized many of their industries consistent with its policy of having elements of a market economy and finally reaching towards it goal, having a mixed economy. Market Structures in Tanzania Tanzania’s market structure is varied. It involves perfect competition, monopolistic competition, oligopoly and monopoly. The country has diversified its market structure in terms of relaxing regulations in some sectors while creating its stronghold in other important sectors. Liberalization and privatization have been notable measures to allow existence of different market structures thus giving ample opportunities to investors and the private sector to compete with one another. 1
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The perfect competition market structure is fairly limited to the agricultural sector where by there is less differentiation between the primary goods (i.e. cash and food crops). Moreover, the fact that it is the largest contributor to the annual GDP – It also employs 80% of the workforce- reflects on the ease of restrictions by the government in terms of entry to the market. Marketing board formed by the government normally assists the peasants and farmers in marketing their agricultural produce as well as to fetch the best possible market. In some cases, farming implements and funds may be extended to farmer’s cooperative societies. The Oligopoly market structure is where few producers manufacture a certain product. In Tanzania, it’s fairly limited to the manufacturing sector involving a few companies namely the cement, beer, mining and sugar companies. These industries usually require high investments and thus they are mainly owned by foreign companies due to their capability of footing high capital costs, use of high – level technology and expertise in production. Restrictions by the government are fairly limited but the initial investment requirements prove to be the main obstacle. The Monopolistic Competition is where there are many producers of a commodity. These
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eco - edited - Country of Choice: United Republic Of...

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