This article describes the various domains in which inequality manifests itself in Tanzania. It outlines the key drivers of inequalities as including wide income gaps, unemployment and a collusion between political and businesses elites that creates political capture and patronage, thus fueling corruption and diverting resources from essential services. The article points out a correlation between access to education and income inequality, and highlights the fact that, despite marginal reduction in poverty, inequality is on the rise.
Inequality has been rising throughout the world.In the majority of developed countries; In most developing countries, notably India and China among countries. Although widely agreed as a problem, few policies to address it.There are two sorts of inequality: Vertical inequality – among households/individuals.Horizontal Inequality among groups.Ethnic groups (many African countries)
Religious (and ethnic) Western Europe; N.Ireland; West Africa; India. Racial: Malaysia; Fiji; US; Brazil
Inequalities in health outcomes and health care are important. From a “rights” perspective, health policies should seek to narrow inequalities and provide equal health care for equal need. From an economic perspective, health care resources are more efficiently used if they are directed towards the groups that need them most. From the perspective of national health progress, catch-up by disadvantaged groups offers the best prospects for rapid progress towards national targets.
It is now universally accepted that economic growth is a necessary condition for poverty alleviation. As countries become richer, on average the incidence of income poverty falls (World Development Report 2000/01 ).It is income which has the greatest implications for poverty than all other aspects.
According to (World Bank, 2001), other indicators of well-being, such as average levels of education and health, also tend to improve along with income poverty.
Structural changes contribute to economic development by enhancing productivity and creating more and better jobs, which is demonstrated by a wide and growing body of literature. Structural changes into higher value added sectors and upgrading of technologies in existing sectors by applying more complex production technologies, increase demand for higher levels of education and skills. Education and skills are intrinsically linked to these processes and constitute a major driver of economic transformation. An adequately educated labour force is essential for a strong economic growth. It is also valued for its role in helping people to become more productive, create capacity to innovate and adopt new technologies. Education and skills training themselves, however, do not create (decent) jobs, and an increase in education attainment levels may also result in unemployment, over-qualification and the underutilization of skills (Sparreboom and Abdullaev, 2013).
Given the difficult global context, the continued resilience of economic growth in the Eastern Africa region has been quite remarkable. But this strong performance has increasingly been accompanied by growing (and sometimes quite vocal) concerns over the quality of the growth – particularly the extent to which growth has been conducive to broad-based poverty reduction and employment creation. Across the region, there is evidence to support the idea that, despite a much improved economic performance in the 2000s after two decades of economic stagnation, a lot of social and economic aspirations have still not been fulfilled. One example of this is that, although USD 1.25-a-day poverty has been reduced in relative terms in the region (from 65 per cent of the population in 2000 to 54 per cent of the population in 2011), the absolute number of citizens living below the international poverty line has actually increased, from 155 million to 166 million over the same period.
Economic growth is reflected not only through per capita income levels of a country but also through the quality of products due to the transition from generating goods with lower value added to goods with higher economic value produced in developed countries. This process is called structural transformation. In part, it is associated with changes in the available productive factors, which result from the accumulation of human, physical and institutional capital. The trade theory treats structural transformation of exports only as a passive consequence of changes in factor availability. However, the nature of factor accumulation process is still a matter of discussion.
Tanzania ranks among the leading stars of the ‘African growth miracle’. Since the turn of the century it has averaged 5–7 per cent annual growth of gross domestic product (GDP), an impressive track record but one that comes with a number of cautionary warnings. First, the increase in GDP is less striking when adjusted to take into account rapid population growth. Per capita GDP growth has averaged just 2.5–3.5 per cent per year over the same period, slightly above the average per capita growth rate for sub-Saharan Africa as a whole. Second, the Tanzanian economy has added fewer ‘good’ jobs—those paying decent wages and offering some security of employment—than would be expected from its overall growth performance. Third, Tanzania’s rapid economic growth has not translated into correspondingly rapid reductions in poverty.
The East African Community (EAC) countries’ economic growth performance during the past decade has been impressive:1 at 6.2 percent, the EAC’s (unweighted) average growth rate in 2004–13 is in the top one-fifth of the distribution of 10-year growth rate episodes experienced by all countries worldwide since 1960. Such performance is even more remarkable taking into account that the past decade encompasses the global economic and financial crisis that began in 2007. Will this prove to be an isolated episode, with growth returning to lower levels in the years ahead, or is strong growth going to persist?
In the 2000s, policy discourses on the macroeconomics of development in Tanzania tended to focus quite narrowly on the growth- poverty nexus. The usual argument was that the adoption of certain core macroeconomic policies (the so-called ‘fundamentals’ of low inflation, trade openness, market liberalization, sound financial policies and good governance) would induce economic growth, which, in turn, would lead to poverty reduction. More specifically, this argument stated that if GDP per capita grows significantly and if inequality as measured by the GINI coefficient derived from successive household budget surveys does not worsen significantly, it follows that the incidence of (absolute) poverty must fall.Given this premise, which had become a mantra in the international development industry, policy analysis then boiled down to monitoring the correlation between economic growth and changes in income consumption inequality, on one hand, and the incidence of poverty, on the other. When this presumed relation failed to hold – as it did in Tanzania – a policy paradox was said to exist.