THE ECONOMIC OF DEVELOPING COUNTRIES

POPULATION CHARACTERISTICS


1. POPULATION SIZE.
It is the number of people in the production. Population size can differ from place to another. The population size of Tanzania was 23,174,443 in 1998. The size of population of a country has greater importance. Avery large population size can create senior economic and social problems in a country. Similarly if the population is too small than the resources of a country can not be used property and if slows down the development process. Therefore the population size must be ideal well balanced according to the resources of the country.

2. POPULATION STRUCTURE:
It shows the biological composition according to sex and age or biological distribution f the population with respect to sex and age. Sex distribution is shown by an index called sex ratio expressed
      Sex ratio =Total male
                      Total female

The sex ratios are much below 100 showing a surplus of female. Some of the reasons which male sex ratio in Tanzania to be smaller are:
(1) Differential mortality between male and female.
(2) Differential completeness of census recording with possible under reporting of adult male.
(3) International migration which is sex selective affecting mainly the adult male.

Sex ratios vary between region and rural and urban areas. Usually sex ratio is high in urban areas and migration destinations. For example Arusha ,Tanga regions stand out having high sex ratios on the other hand regions like Singida, Kigoma, Ruvuma, Iringa have sex ratios which are lowest below 90%. In urban areas the average sex ratios is more than 120 and highest in Arusha 132. Data on age is more errors due to un accurate reporting. The most common method used to show age distribution is by population pyramids or Age /se pyramid.
Using the 1988 National census data on age sex pyramid is as following.

THE AGE SEX PYRAMID FOR TANZANIA

Some salient feature of the age sex distribution shown by the pyramid

(1) High proportion by young age. According to the 1980 census about 46% of Tanzania population is below age 15 where only 43%of its total population is between 15-64years and older and 50% considered to be productive population.
(2) The dependency ratio is very high , dependence  ratio is expressed as
               Dependency ratio = Population aged (0-14)+population aged 65
                                                Population aged 15 to 64.


CAUSES OF CHANGE IN POPULATION SIZE (POPULATION DYNAMICS) 
(1)Fertility   ( 2) Mortality (3) Migration.

                         FERTILITY:
This means the performance of women in forms of reproduction measured by the number of live birth during a woman’s reproduction care. In measuring the level of fertility in Tanzania during the 1988 population census two measures of fertility were used.
               1.    The crude birth rate.
               2.    The total fertility rate..
1. The crude birth rate defined as the number of birth in a year per 1000mid year population.
            Crude birth rate = number of birth *1000mid year population 
In Tanzania there were 38 births live (out) per 1000mid year population in 1988. Birth rate which  is an adjust  means of which takes account of age detail with the child  bearing ages . Thus total fertility is the average number of live birth per women during her reproductive career. In 1988 population census the total fertility rate was 5.4.

                            MORTALITY
Is the term used to describe the occurrence of deaths in the population?
Some of the rates or ratios used to measure mortality are:
1. Crude death rate.
2. Infant mortality rate
3. Children mortality.
4. Specific death rate.

    1. Crude death rate:
This is the rate, related to deaths per 1000 of the population. It is expressed as
               Death rate = number of death’s *1000
                                    Mid year population
Crude death rate (CDR) has declined from 19% per 1000(1978) 15% per 1000 (1988). The rates are still high by world standards 15 per 1000 in 1988 National population census. Crude death rate is another important compared which determines the population changes.

   2. Infant Mortality rate: (IMR)
Measures the average number of babies who die in the first 12 month’s of life out of every 1000 babies born alive. IMR in Tanzania was 115 per 1000 babies in 1978.

    3. Children mortality rate:
This relates to number of death’s of children before reaching age of 5 years out of low in the year and it is expressed as
               CMR= death under 5 years *1000.
                            Live birth’s in a year.

     4. Specific death rate:
These are rates related to death’s for specific group of population like males, female etc. age specific death rate sex specific death rate.
     Age specific mortality rates shows a declining  trend  between 1988 such as age group of 30- 34 the age specific death rate was 45 per 1000 in 1973 and was 30 per 1000 in 1988 for male

     5.Average life expectancy at birth.
The average number of years a newly born is expressed to line given the death rate at each age. His average life expectancy in Tanzania was 50 years in 1988 and was 44 years in 1978.
          Generally females live longer than males because biologically women can resist diseases better than men almost across all age group and people who live in rural areas. In Tanzania Mainland people in urban areas live on average 52 years and those in rural areas live on average of 42 years. This is due to the fact that in urban areas there are good social and Economic improvements compared to rural areas.

-Why developing countries like Tanzania have high mortality rate in the world?
       1) Poor nutrition provided to the children.
        2) Drought which attaches crops, livestock hence creates food shortage.
         3) High urbanization growth which leads to growth of  sharits and shares where provision of
              utilities is very poor.
          4)  Occurrence of diseases and lack of adequate medical facilities and public health.

     Factors which hinder the study of mortality in Africa includes
1) In adequate and in accurate information on death’s.
2) Poorness of data on age affects that on deaths.
3) Data of deaths is easily obtained by demographic survey and partially by vital registration only.

         ( 3) Migration :
i. Migration is another factor which determines population charge. Migration is the movement of people across a specific boundary for the purpose of resaving. Migration can affect the growth and decline of population directly and by influencing of fertility of the areas of origin and destination.
Migration tends to bad an increase in population of the receving area while reducing the population of the origin area. The next affect of Immigration (In migration) and Emigration (0ut migration) on an area population can be expressed as an increase and decrease per 1000 population of the area.
It can be expressed as:
= number of Immigration – number of Emigrants * 100
Total Population.

           POPULATION GROWTH  RATE  
The population growth rate of the population is the rate at which it is increasing in given year due to natural increase and ret migration.
   It is expressed s a percentage of the base population. The population growth rate takes account all the factors or components of population growth. These includes birth’s, death’s migration.

1. The rate of natural increase.
Natural rate of increase is the rate at which a population is increasing as decreasing in a given year due to surplus ( or deficit) of birth’s over death’s it is expressed as a percentage form of the base population. This rate does not include the effects of migration. It is expressed as:
                 Birth rate – Death rate * 100 =  1000
                                    or
Birth rate – Death rate * 1000 
Total population (Mid )                     
Net Migration rate:
It is expressed as = Number of Immigrants – Number of Emigrants * 1000
                                      Total population

This with the rate of natural increase and net immigrant’s rate growth rate can be calculated as.
Growth rate = Rate of natural increase (+ or - ) net migration rate. Growth rate depends on the balance between birth and in –migration rate on one hand and deaths and out migration on the year.
The population growth rate in the Tanzania was 30% in 1987 and was 2.8% in 1988. This shows that the national population declined slightly from 3.0% in 1978 o 2.8% in 1988. This does not mean there is low population growth. The rate is still very by International standards.

FACTORS CONTRIBUTED TO RAPID POPULATION GROWTH IN DEVELOPING COUNTRIES LIKE TANZANIA 


i. Most Africans have the customs of marrying at an early age. Early marriages increase the number of children that married women can bear.
ii. African have the traditional of having large families in past the large proportion of children born usually die before reaching maturity and so it was essential to have a large number of off springs to ensure that at least some survival.
iii. Africans (males) gain pride prestige of they get a large number of  children
iv. Family planning programmers is not or until recently has not well been practiced.
v. The decline of mortality rate due the decline of death rate because of the recent improvement in medical knowledge, provision of transport introduction of education and public health increases production of food and rise in the standard of living.
vi. Absence ot better medical advisers especially in rural areas who can advice the advantages and disadvantages of having large families.
vii. Polygamy is common to Africans. All these mentioned reasons leas to high total fertility rate in most developing of countries.

THE PROBLEMS OF RAPID POPULATION GROWTH
a) Health provision

Rapid population growth affects the provision of social services. The increase in the population needs for.
i. Building new health care facilities such as dispensaries, hospitals maintenance of the existing and the new ones.
ii. Purchasing of essential equipments and supplies.
iii. Training and qualified mechanical staff.

All these delay the achievement of the designed health care standard in terms of coverage and quality.

b) Provision of education services.

The rate of population growth determines the number of students, the required number of teachers and the required funds become more stretched while reducing the country’s ability to invest. Also not all school age children will be enrolled due to over crowded classrooms with few desks and books.
c) Food storage and famine:

Rapid population growth creating increasing demand for food while the country’s resources [lord] is limited where by family land becomes divided into very small plots, they can not provide enough food for the family therefore hunger, malnutrition and famine may exist.
d) Unemployment problems:

The population may grow faster than the number of jobs available to the increased population every year.This result in widespread unemployment and underdevelopment.
Underemployments are those who have skills which would have permitted them higher earrings of better jobs were available.
Also rapid population growth in urban areas (urbanization ) require a complicated ret of services such as housing , -------               sewage and water that can not quickly be scale up as population growth up.
Due to luck of employment opportunities and well improved social services may lead to different human armies-abortion, rape, use of drugs prostitution etc.
e) Environmental destruction:

Environment is affected directly by rapid population growth. As population grows, needs more land for food growing and grazing which threats forests and wild life also forests are destroyed by burning wood for fuel again this soil leads to soil erosion.
f) Low capital accumulation :

The supply of capital would tend to be reduced because the number of consumers is high (due to high birth rate) such that exacts on depressing force on level of saving.
For example, a family with the some total income but with a large number of children would surety tend to consume more and less other things being equal.
g) Per capital income and standard of living of people will fall. A country with rapid population growth has high dependency ratio which reduce the capacity of a country to save the greater part of income generated will be for consumption.

POPULATION POLICIES TO SLOW DOWN RAPID CONSUPTION GROWTH
A. Short term population policies.

Family planning program – family planning involves a voluntary decision and action taken by a couple to delay or limit children bearing. The government encourages family planning because it promotes the health of the mother, children and retards the rapid population growth rate. Family planning advocates the following to mothers and communities.

 Delay their births.
 Pregnancies at the age of below 18 years are discouraged.

ii. Space their births

 The interval between pregnancies should be greater.

iii. Limit the size of their families.


Mothers are discouraged to have children beyond forth birth because mother’s are physically weakened from previous birth’s also children born into large families often compete for limited family resources.

iii. Avoid pregnancies after mother has attained 35 years of age because older mother’s lives are threatened.

 Discourage early marriage and be recommended marriage to be taking place 20 – 25 years.
 Discourage prostitution practices.

B. Long term of population policies.

 Free family planning system through the introduction of private social services such as education, medical care services.
 Creation of employment opportunities by the government to youth so that youth’s to spend most of their time working and earn more income in rural areas so as to educate people on the importance of family planning.

POPULATION AND DISTRIBUTION:
Geographically population distribution can denote distribution
Of population number over space or distribution shows special
Spread of people within the area available to them for exploita
tion . The 23 is million people living in Tanzania in 1988 occup
  ied total land area of 1, 885, 987 km2.
The population distribution in Tanzania is unveil distribute
d. Area with high population concentration include lake Victor
ia zone, have high agricultural potential and linked to major ur
bancentres.

RURAL _ URBAN POPULATION DISTRIBUTION
  
Over 80% of the Tanzania populations live in rural areas and the majority depends on the land and its gravity is of considerable importance in explaining the internal distribution of the rural and urban centers shows that 21. 1% of the total populations were living in urban areas in 1988. When this year compared with 1978 was 13.3% and was still 21.1%in 1988.It means that the urban population has increased by 53% between to 1988.

POPULATION DENSITY
The index used spatial distribution is called population density .it refers to the ratio of a given number of people to a given land areas density which is widely used to measure population distribution expresses the spatial spread of people. It illustrates the link between population and resources distribution at different levels of analysis.
Differences in density reflect the real variation of people and resources over the land area. The population density of Tanzania increased from 19.3 persons per square km in 1978 to 26.2 person square km. So it has increased by 32% between 1978 and 1988 census.
The cause of increase in density may be result of both natural income and inter regional and International migration. The population densities of 26.2 per km2 seem to be low by International comparison. In general the population in Tanzania is uneven distributed. The distribution is much rained at regional and district levels. Some regions and districts are favorable than others.

FACTORS AFFECTING POPULATION DISTRIBUTION IN TANZANIA
Combinations of human and physical features/ factors have influenced the pattern of distribution in the country.
These are:
i. Climatic condition especially distribution of rainfall
ii. Soil fertility for farming and grazing land
iii. Differences in natural increase
iv. Existence of water resources
v. Economic activities such as industries, Mining, commerce.
vi. Social and political factors.
vii. Natural physical conditions

Population distribution relative to resources is difficult to determine because of the wide meaning of resources and continuous changes in population size. The term “resources” may mean climatic and moments, soil fertility, minerals, forests, fooleries, wildlife, investments such as Industries, social services, labour power, and level of technology which together can be classified. The relationship between people as under population optimum and over population

UNDER POPULATION OPTIMUM AND OVERPOPULATION
A. UNDER POPULATION:
Under population is that situation when population of any coun
try is smaller than as compared to national resources. The resources of country can not be utilized effectively due to shortage of labour force. Indicators of under population are;
i. Lack of large production.
ii. Less specialization.
iii. Low per capital income.

B. OPTIMUM POPULATION

Optimum population is the level of population which is most
desirable in view of the natural resources of the countries. The resources of the country can be utilized effectively and national income can be maximized out the available resources.
Optimum population is relative term and it can be determined according to the resources available in any country.
Optimum population is not static concept since the state of technology and stock of capital are constantly changing. An increase in the national stock of capital improvement in techniques of production and in the fertility of land will attend increase the size of the optimum population. Indicators of optimum population are:
i. High productivity in the economy.
ii. High per- capital income.
iii. High level of specialization in production.
iv. High level of capital accumulation

C. OVER POPULATION

Over population is the situation when population of a country
is greater than as compared to the natural resources. Most of the countries of the world are facing the problem of over population. The days in order to save this problem various measures are being adopted to decrease the rate of growth of population example , family planning campaigns has been started by various countries. Main indicators of over population are:
i. Shortage of houses.
ii. Insufficient medical and educational facilities.
iii. Lack of employment opportunities.
iv. Shortage of capital and other resources.
v. Low productivity.
vi. Too- large population.
vii. Little per- capital income.

LABOUR FORCE

Labour force means all productive and economically active population which make up the group of ( 15-64) years. Usually there is a situation of the population out side the group such as students, disabled people, person who neither worked nor worked for work. There fore to get the economically active population that include  all people who work in the group participation rate is used which show as the percentage of the number of persons  participating or able and willing to participate an one way or another the corresponding defined population in those segments. Foe example in group of (15- 64) years there more 150000 people and the participation rate is 30% than the labour force (economically active population ) in the group make up only 1.2 million people. The participation rate in Tanzania was 70% in 1988 census.

CHANGE IN OCCUPATION DISTRIBUTION
The model has developed by W. Reshow economic development path of a society. Show how occupation distribution changes.
According to Restows model of economic development societies passing through five stages of economic growth are:

a. Traditional society
A traditional society is one whose structure is developed within the limits production function based on pre- science and technology. It depends on the agricultural sector and the dominated sector of the economy is land – lord class. The main characteristics of the traditional society are as follows;
i. These is low productivity level in all sectors of the economy
ii. Over 75% of the population is engaged in agriculture sector especially food production.
iv. Most of the population is living in the rural areas.

b. The pre- condition for take off.

The time at which there is the change in attitude from that of accepting the economic environments as beyond control to a belief that by systematic examination and action man is able to improve the economic positions. The main characteristics are:
i. The rate of investment rises.
ii. Development of transportation and communication take place.
iii. Internal and external trade takes place.
iv. External influences stimulate the growth of production.
v. Population moves to secondary and tertiary employment.

This stage covers a long period of century or more during the pre-conditions for the take off are established.

c. The take off.
This stage is defined as the internal during which the rate of investment increases in such a way that real output  per capital rises and thus initial increase can rise with it’s radical change in the technologies of production. It covers relatively a short period of two or three decades in which the economy transforms more or less automatically. Main characteristics are:
i. The proportion of the net investment to national income rises from 5% to 10%.
ii. Appearance of one or more substantial manufacturing sectors with the high rate of growth.
iii. The existence of quick emergency of political social and institutional framework which exploits impulse to expansion and gives to growth an ongoing character.
iv. Forces of economic progress dominate in the society.


d. The drive to maturity.
During this stage the economy progressively grows and if dries to extent modern technology over the whole front of it’s economic activity.
-The main characteristics are:
i. About 10% to 20% of all the national income is invested.
ii. Improvement in technology and new industries accelerate.
iii. Technologically complex industries are established.
iv. Economic growth spread to all sectors.
v. The economy finds its place in the international economy. Goods formerly imported are produced at home. [Internal trade is encouraged] .

e. The age of high mass consumption.
Is the stage of high living. The main characteristics are:
i. The lending sector shifts towards durable consumer goods services.
ii. Real income and capital accumulation become very high.
iii. General demand goes beyond basic need to consumer durable goods.
iv. Most of the population lives in urban areas.
v. Tertiary sectors employ most of labour force.


CRITICISM TO ROSTOW’S VIEW OF STAGE OF ECONOMIC GROWTH

Rostow’s  stage analysis has been criticized by certain economi
sts. Rostow hs tried to explain the industrial revolution it is historical concept. Restow’s [ contribution ] distribution between these preconditions for pre take off and the take off period is not evenly stated and hence economic historian failed to see the sharp distribution between these two periods that he does.
Restows theory implies that a country should turn to industrial development effort only after agriculture has been modernized and stock of capital greatly increased, but experience has shown that more development in both agriculture and industry(ies) can take place by side.
This does not mean that we would consider Rostow’s views as irrelevant, the theory is useful.
Because the different characteristics of the various stage in development of society according to Rostows news show the relationship between the occupational patterns as the society level of economic development rises.
Stage one and two in the model one those in which most of developing countries have reached
For example Tanzania has over 80% of its labour force in agricultural sector and only about 20% of the population living in urban areas. These correspond very much with stage one.
Most of the developed countries have stage four and five. For example USA, France, Japan, Germany hence highly urbanized over 90% of the population lives in urban centers.

THE MALTHUSIAN POPULATION THEORY

The theory tries to give out the main causes of mass property and unemployment during the time of 19th century in Britain.
Malthusian theory of population associated with the name of Thomas Malthus who was a Britain economist. Malthus claimed that mass poverty and unemployment was caused  by the fact that the population growth rate was greater than food production for example birth rate was higher and the population was multiplying itself at higher than the food production. The theory has been explained as follows:
a. Population of a country increases at higher rate as compared to the increase in population of food stuff.
b. Population increases according to geometric progression example 1, 2,4, 8, 16, 32----where the production of food increases at arithmetic progression  1, 2, 3, 4, 8, 10.
c. If the artificial methods are not adopted to control the population of a country then it becomes double in 25 years time.
d. If the artificial method are adopted to control the population then the nature will take rearrange and natural calamities like wars, floods earthquake , small pox , cholera etc will decrease population .

The graph below shows relationship between population and food population.


CRITICISMS  OF MALTHUSIAN POPULATION THEORY

The theory was strongly criticized by the economists and it was regarded as unreality and weak theory. It is criticized as follows:
i. Malthus advanced his theory during the industrial revolution where by a lot of human hands were being replaced by machines in production and thus causing mass unemployment.
ii. Britain is the capitalist country where item is unequal distribution mass-poverty can not take place.
iii. Malthus did not take into consideration of techniques (methods ) food production can always be expanded to meet the increased demand.
iv. Trough international trade, countries can always imports food and other commodities to supplement local production.
v. Thomas Malthus use the falsified data of USA at that time, where there was a lot of migrants. In USA that growth rate is not applicable now a days and it was not applicable in other countries even during his time. This theory was injected later on and it was stated that the production of a country must be optimum. The optimum population theory is more realistic and nearer to reality. This fact makes the Malthusian theory as incompatible these days. Although the Malthusian theory has been proved correct in some cases but still of not a comprehensive or reliable theory. The in variation of new techniques of the population and the development at greater speed. The present population trends are not very encouraging but the steps can be taken to control the population level and increase the production of different commodities to greater extent.

QUESTIONS: Brain washer.
1. Write short notes on  (a) population growth rate

(b) Dependency ratio (c) Mortality (d) Rate of natural increase.
2. Distinguish between over population and under population.
3Why it is necessary to monitor the rapid population growth in our country.
4. Critically examine the Malthusian theory of population.

A. ECONOMIC PLANNING

Definition:
Economic planning is the conscious effort of government to influence direct , organize and control main economic variables in a country or region over a given period of time in order to achieve a ret of predetermined goals and objectives.
The main economic variables one such as aggregate consumption, investments, price levels, import and export trade, employment level etc.
From development view points, therefore by planning we mean a method of organizing the variable resources of a country for the purpose of fulfilling certain ends.

B. HOW DOES ECONOMIC PLANNING DETERMINE THE DEVELOPMENT OF THE NATIONAL ECONOMY?.

From economic planning to determine the development of the National
Economies the following are considered:
i. Division of National income between accumulation and consumption hence determination of the rate of economic growth.
ii. Co-ordination of the activities of the different sector of the economy especially the output of the sector and purchasing power at the disposal of the price.
iii. Distribution of instrument among the different sector of the economy thus determination the direction of the development.


C. CHARACTERISTICS OF PLANNING.

i. Decision making process.

At various stage or levels and in different sectors of the economy involves
Making decision on matters like objectives methods target etc. This simple that the planning entails deciding and making choice on desirable activities
ii. Planning has specific objectives to be attained.

Planning involves a strong relationship between the means and the object
ives , hence it’s consistency. Thus the amounts of resources needed are clearly given out for the achievement of the goals.
iii. Time schedule activity power over an area.

Two dimensions are involved in planning time and space usually
Planning is a continuous process that affects people in a given area or a country over a given period of time which goes from the past into the future.
iv. Comprehensiveness

In planning of the nation economy all sector and branches of the
Economies have to be covered. In other words it affects all parts of the economy in a country.
v. Socialized natural

Process and its activities man centered. This means that the objectives
are to be benefit the human society and the resources need to be societal .
vi. Planning commission (central authority )


D. STAGES (ESSENTIALS ) OF ECONOMIC PLANNING

i. Identification of the objective to be attained in the specific period.
ii. Identification of requirement to achieve the specific objectives.
iii. Selection of investment projects to b e under taken to achieve the objectives priorities in choosing projects should be those essential agents and reflect social needs.
iv. Break down of investment projects into quantified targets. The targets should be indicating the type of activities to be undertaken and necessary impacts to be used.
v. Show how impacts will be secured including the source of the finance.
vi. On starting the projects the need to be kept on schedule and amendment unforeseen shags.
vii. Evaluate the results from time. This needs creating evaluation machinery for evaluating the progress made.


TYPES OF PLANNING

i. General planning.

This covers all aspects of the economy and the central authority
Completely controls the investment and utilization of resources on an indirect manner. There is also private enterprise system throughout the country.
ii. Planning by inducement.

In a private enter price system the state does not control the allocation
of all resources and so the operation of a plan involves co-operation between business firm and the government. The government may set production targets for both private and public enter prices in a selected  number of industries or it may try to set targets for the economy as a whole but their achievements is dependent up on financial incentives or disincentives.
iii. Compulsory planning.

This means planning by direction under a central direction authority.
This type of planning is associated with community state.
The control and use of available resources are in hands of the central authority which makes it’s decision in accordance with its opinion as to consumers needs. The government here fixes target for various state owned industries for a number of years a head and prices are fixed by the central authority.
iv. State planning and free enter price.

In mixed economy some planning of production is undertake by the
Government directly or through its nationalized enterprises and greater par is left to private enterprises. The government and private sectors existing together and function side by side and there is the point responsibility of the individual enterprises and distribution the state to undertake the intensive work of production and distribution.
The government however, adopts necessary measures to regulate and influence the private sector so as it may function in the interest of the nation rather than in the interest of private enterprises.

E. IMPORTANCE AND NEED OF PLANNING IN DEVELOPING COUNTRIES LIKE TANZANIA.

The situation in developing countries necessities planning in order to
Overcome the economical underdevelopment existing in them. Planning has the ability to transform the economic and social conditions so as to create and lay down the material foundation for economic development hence raises the standards of living of the people.
i. Un-organized market.

In less developed countries (LDCS) commodities and factor markets
re poorly organized and existence of distorted price means that consumers and producers lack necessary information to at in such a way conducive to efficient production and distribution of goods and services. Thus planning was necessary information which consist business people in making decision as well as consumers.
ii. Limited resources (financial and skilled manpower resources).

Less developed countries can not afford to waste their limited resources on unproductive .Thus investment project must be chosen in the context of an overall development programmers and also skilled manpower must be utilized where its contribution will be most useful.

iii. External pressure.

The formation of detailed development plan with the specific sect oral
Output target carefully designed investment project has been necessary condition for the receipt to bi-lateral and multilateral aid.
iv. National campaign.

It may be success in rallying the people behind the government in
national campaign to dominate poverty, ignorance and diseases.
v. Planning makes possible optimum utilization of the resources available in the country.
vi. Planning is advocated on the ground that the decisions of the state are superior of the individuals. The state can develop a country economically at a desired speed.
vii. Planning involves target for certain industries which have mentis in standards to be pursued.
viii. Widespread of unemployment.

The need for planning in underdeveloped countries is stressed by the
necessity of removing widespread unemployment.
ix. Balanced development.

For rapid economic development [underdevelopment]
Underdeveloped countries require a harmonized growth of agricultural and industrial sectors.


F. LEVELS OF DEVELOPMENT PLANNING

There are three levels of development planning. These are:
i. MACRO LEVEL PLANNING:

This deals with the economy as a whole. It deals with entire economy
In terms of such Macro-economic reliable as consumption, production investment sang, export and import etc.
This is usually prepared to cover period of 4 – 5 years plan, also includes perspective plan which covers long period of plan example 15 years plan. For example Tanganyika five years plan (FYP) for economic and social development ie July 1964 – 30th June 1969 was accompanied by the projections for 15 yeas period to 1980.

ii. SECONDARY LEVEL-PLANNING:

This involves sectoral planning and regional planning or area
planning.
a) Sector planning.

Refers to detailed planning of a specific sector eg-agriculture planning
A comprehensive set of polices for development of agriculture sector must be outlined.
b) Regional plan or area planning.

This means the focus of attention is on a particular region or area within a country.

iv. TERTIARY LEVEL PLANNING:

Refers to identification of possible projects, appraisal of these projects
Generally in –cost-benefit terms. These involve much effort on single project in a certain sector.
Summary of the three levels
                                                                                    Annual plans
                                                                                 
MACRO LEVEL PLANNING
                                                                                      4-5   Years plans

                                                                                    Perspective plans ( 15_25
                                                                                           Sectoral planning

SECONDARY LEVEL PLANNING                             Project planning
                                                                                                                                         
TERTARY LEVEL PLANNIMG                                        Project planning

STRUCTURE OF PLANNING IN TANZANIA:

In terms of time periods structure of planning falls into three groups;
i. A short term plan.
ii. A medium term plan
iii. A long term plan.

SHORT TERM  PLAN
These are a plan that ranges from one year to less than five years. For
Example in Tanganyika three years development plan 1961 – 1963
The reason of adopting short plan includes;
a) A country being newly independence.
b) Planning being adopted for the first time etc.

However these plans have some limitation such as the difficult to
Bring about structural changes in a short nun inability to mobilize sufficient reason and choose the alternative.
MEDIUM TERM PLAN
These are most popular in different countries and they range from 5-10 years. These have been taken to confirm political consideration particularly in terms of government of presidency. Some of the advantages of this plan are:
a) It is easy to mobilize the people.
b) The possibility accurate forecast of economic variables.

An example of Tanzania five years development plan ie TFYP 1964/69 and TFYP 1969-1974 and TFYP 1976/ 81
LONG TERM PLANS
These are long period plans that take more than 10 years . These stems from the fact that some economic or social variable changes over in the long run like population, employment and some objectives can only be realized in the long run example manpower needs investment, economic growth etc. 
However these plans have their demerits such as the existence of uncertainty on what happens next period, difficulties due to administrative machinery needs.

THE OBJECTIVES OF ECONOMIC PLANNING

Some of the objectives of economic planning in developing countries like Tanzania are:
i. To achieve rapid increase in per capital income on output.
ii. To maintain stable price level.
iii. To balance of payments.
iv. To attain high level of employment.
v. To eliminate poverty, ignorance and diseases.
vi. To attain diversified and self reliant economy.
vii. To adjust according to the international problems affecting the economic.

PLANNING ORGANIZATION

The diagram below shows how planning was being carried in Tanzania since 1972 until the recent time


NOTE:

RMT                  Regional management team

RDC                   Regional development committee

DMT                   District management team

DDC                     District development council

DPIC                    District planning and implementation committee

PROBLEMS OF PLANNING

The problem experienced in the process of economic planning is less developed countries like Tanzania are both internal and external problems.

INTERNAL PROBLEMS
i. Lack of necessary information.

This is due to the absence or inadequate and some unreliable data
necessary for planning.
ii. Possession of narrow reserves base and limited earning hence insufficient domestic capital formation.
iii. Lack of trained staff.

Non availability of competent experienced and trained staff is another
hindrance for planners.
iv. Local participation in formulation control and implementation of plans is limited by ignorance and non-availability of local finance.
v. Presence of private sector.

In mixed economies like Tanzania private sector was not under the
control of planning authority. Due to this reasons planners can not prepare adequate and comprehensive plans. The activities of private sector however have been integrated in macro plans very recently.
vi. Inflation.

Inflation is very serious problem for most of developing countries like
Tanzania. Due to rapid rise in prices it is difficult to predict the cost various procts in advance.
vii. Shortage of funds.

Lack of funds is another problem for the planners. Most of the project
can not be completed due to insufficient of funds.
  Large grantity of investment are important intensive at the expense of the development of local national resources.

EXTERNAL PROBLEMS

i. Use of foreign expertise which is not quite familiar with over local environment.
ii. Participation of multinational – cooperation through their finance technology which may lead to conflicts eith the country objectives.
iii. Policies of foreign and for economical development.
iv. Developing countries are the producers of primary goods for the world market while developed countries dominate over the world market and therefore exports from LDCS are lowly priced.
v. World inflation like the rise of oil price in the world market affects the economies of developing countries like Tanzania.
vi. War of aggression like Idd  Amin Dada of 1978 – 1979 where by the government of Tanzania used a substantial amount of money ( forces ) to wage the war.
vii. High cost of serving external debts because of high interest rate to be paid.


QUESTIONS
1. a) What does economic planning mean.

c) Discuss the usefulness and problems related to economic development.

2. What is meant by economic growth? What are the main factors of economic growth?
3. Discuss the main features of planning.
4. What are essential of economic planning?
5. a)Define the term “ economic development “
b)  Explain the major determinants of the rate of economic development.

6. Discuss on the main characteristics of underdeveloped economies like Tanzania.


MARKETING AND DISTRIBUTION

A. INTRODUCTION:

Marketing means human activity that takes place in relation to
Markets, (marketing can be defined as the working with markets to actualize potential exchange for the purpose of satisfying human needs and wants.
There fore marketing is the business of distributing a product either from it’s place of production or from the part at which it was imported to the people consumers or produces.
Sellers have to search for buyers. Identify their needs design appropriate products, promote them, store and transport them negotiate and so on , such activities are product of development , search , communication , distribution price and service constitute care marketing activities.
Distribution:
Refers to the channels by which goods are taken from place of production to the actually want to make of them, In order to achieve the desired goal of production. There are several channels of distribution depending on such things  as whether the goods are home produced or imported,  whether they are manufactured goods or from produce, whether there are a large number of producers or only few. 
The most usual wutis by which goods pass from the producer to customers is by way of wholesaler or retailer trough in case of branded goods, the manufacturer supplies them direct to the retailers such as coca cola brand etc .
In some cases the manufacturer may spen his own shops in order to by pass both wholesalers and retailer. The more complicated the distribution as with imported goods the greater the number of wholesalers or middlemen between producer and retails.

B. CO-OPERATIVE:


Cooperatives is a voluntary association of persons joining together
and registered under the law for the further once of their common economic interests on the basic of principle of equality.
It may also be defined as a productive dense used by the relatively weak sections of the society to safeguard their economic interest against exploitation by the producers or sellers working solely for the maximization of profit.

THE MAIN OBJECTIVES

i. To improve economic status for the members.
ii. To contribute to the national economy through self-reliance and democratic control of economic activities.
iii. To increase the members and the national capital resources by encouraging thrift, preventing usury and encouraging national use of credit.


TYPES OF COOPERATIVE

There are various types of cooperatives depending on the nature of business they are conducting.
i. Consumer cooperative societies.

There mainly established by the consumer to detain their day today
requirements of goods at cheaper price.
ii. Producer co-operatives or industrial co-operatives.

These are voluntary associations of small producers. They are found
with objectives of eliminating the capitalist class from the system of industrial production.

  All the agricultural cooperatives are basically producers or govern of different kinds of agricultural products. The co-operatives associating in buying required form equipment or fertilizers. They also help the members.
iii. Credit cooperatives.

Saving and credit societies are aspects of emergent consumer societies
mainly in urban. This trend is standing moving into rural areas. They be long the members who come together and pay in money which they ultimately get to borrow for their industrial products.

MAIN CHARACTERISTICS OF COOPERATIVES

i. Membership.

Any one can join cooperatives society for their choice. One can leave it
at any time after giving due notice. While leering one can withdraw one’s capital from the society.However transfer of shares to another person is not allowed.
ii. Management is the key root of management of cooperatives. Leaders are elected by the members, each member has to campaign for any office.
iii. Finance.

The capita of a cooperative is raised from members by way of share
Capital.
iv. Co-operate status.

Cooperative is registered under law. The registration of a
Cooperate status and the cooperative enjoys the privileges of law and protection by the states.
v. Fixed rate of return on capita.

This has been necessary in order to induce the members to contribute
their maximum amount to the funds of the cooperatives society.


THE ROLES PLAYED BY COOPERATIVES IN MARKETIN AND DISTRIBUTION OF AGRICULTURAL PRODUCTS.

i. Cooperatives buy agricultural products at fair price so that enables farmers to get high income.
ii. Cooperatives provide banks to the farmers in the forms of finance and agricultural inputs in order to modernize agricultural and expand output.
iii. The community benefits from the advantage of large scale production and marketing of agricultural output.
iv. Cooperatives prevent exploitation of the workers or farmers by any individual or group of individuals.
v. Cooperatives increases production of agricultural products through joint effort by members.
vi. Cooperative allows the consumers to gain direct service at the lowest cost.
vii. Cooperatives by agricultural products and channel the product from place of production to the people make use of them (where sell internally or export).


PROBLEMS OF COOPERATIVES IN TANZANIA

i. Lack of sufficient capital.

Cooperatives rely on financial contribution from the members for
their capital. But in Tanzania members have relatively low incomes and some times members are reluctant to pay high contribution.
ii. Weakness in management.

Cooperatives in Tanzania have in inherent weakness in management
due to in efficient committees who lack education experience or who have been promoted on the length of service rather than on the ability efficiency and qualification.
iii. Lack of business experience.

Mostly the members of cooperatives do not have the experience of
the business and s the result the cooperatives fails to achieve their objectives.
iv. Disagreement among members.

Sometimes members of cooperatives do not agree on specific issue.
The situation creates so many competitions.
v. Inability to service debts and lack of clear policy.
vi. Lack of motivation.

Due to limited returns members are not that well motivated.
vii. Excessive state regulation.

The state regulates the working of cooperatives departments.
This hampers the work of the cooperatives.
viii. Poor infrastructure in the country.

Roads in the rural are poor shortage of transport equipments and
shortage of good storage. All these problems restrict the size of co- operations of the cooperatives.

C. MARKETING BOARDS:

Marketing boards are trading agencies established by the government
to control marketing (and in some cases production) of primary products and processed agricultural commodities.

MAIN TYPES OF MARKETING:
There are mainly three types of marketing boards. These are:
i. Export produces marketing boards such as those established to handle export crops grown by peasant farmer. Example of marketing boards of this type in Tanzania are the lint and seed marking board for cotton (1952 ) the sisal marketing board which has been established in 1965 national sugar board etc.
ii. Statutory boards.

These are concerned with marketing of food stuffs like maize and
paddy for domestic consumption such as the maize and the general produce board (MGPB) of Kenya.
iii. General produce boards handling minor crops and mixture of crops for domestic and export market. The national agricultural products boards (NAPB ) in Tanzania was established in 1963 to control the marketing of maize , paddy , oil seeds and one important export commodity cash nuts.

Marketing boards in Tanzania including:
i. The lint and seed marketing board for cotton (LSMB) set up in 1952.

LSMB licensed buyers of lint and seed and in particular bought from
Ginneries all cotton lint produced in Tanzania for a export. The board suggested to announce of uniform price payable to farmers for a given grades og seed cotton in advance of the planting seasons.
ii. National agricultural products Boards ( NAPB )

The NAPB established in 1963 to control the marketing of marine
Paddy. Oilseeds and one important export crop cashew nuts. This was intended to operate in conjunction with cooperative unions and societies are system of single channel marketing.
The NAPB appointed cooperative unions as its main agents while the societies received the exclusive privileged of purchasing maize from farmers.
iii. The sisal marketing board:

The (SMB) has been established in 1965 with aim to control the
Production (through quotas to sisal plantation) and marketing of sisal operated by appointing licensed sisal agents to marketing and export
iv. Other marketing board existed in Tanzania are Tanganyika Tobacco Board (TTB )

The Tanganyika pyrethrum board (TPB) the National sugar Board 
(NSB) coffee board etc. The function of the mentioned marketing boards was similar involving licensing regulations advisory work, research and information.

MAIN CHARACTERISTICS OF THE COMMODITY BOARD STRUCTURE IN 1974

i. Organization on a separate commodity by commodity basis and extension of all crops.
ii. Operation as Para totals.
iii. Merging of marketing function into board development authorized through all their stages.


THE ROLES PLAYED BY BOARDS IN MARKETING AND DISTRIBUTION OF AGRICULTURAL PRODUCTS:

i. Protected producers from short fluctuations of world prices and allow them a greater stability of economy.
ii. Encouraging production.

The price stabilization would itself encourage farmers or producers to
Increase production.
Also the board financed research in markets and plant breeding pest control and improved husbandry. The boards have undertaken directly through cooperatives unions or societies to supply peasants farmers with agricultural inputs such as fertilities, pesticides etc.
iii. Marketing improvement.

Marketing boards provides a medium for channeling investment into
marketing weather in the form of storage, facilities, transport, processing or crop finance.
iv. Marketing boards used to exercise control over output and therefore over price in international market example the sisal marketing board was an instruments in cutting down output in tire with reduced world demand for sisal.
v. The boards acted as very effective tax gathered for government. This is because the substantial marketing board reserves and revenue used to finance infrastructure in the country and other development projects.
vi. Organized good systems of agricultural products marketing regulations control prices improve the collection, storage, marketing distribution and supply of agricultural products in the country.
vii. Fixed producers price at a reasonable level and well below export prices.
viii. Provided guaranteed markets as its own buying stations and deports for all scheduled crops at fixed price usually pronounced for each season.


PROBLEM OF MARKETING BOARDS:

i. Encouraged the development of black markets in the country.

The failure of the board to more produce efficiently between surpluses
And deficit regions stimulates illegal trading, unofficial markets especially of the market of good crops like maize.
ii. Excessive in controlling the marketing (markets) especially in attempt to control or prevent on illegal trading because this involves the maintenance of large cadre of surveillance and inspissations forces including police and defense force.
iii. The boards were more effective as instrument of taxation then price stabilization the total withdrawals of marketing of board’s surplus and revenue amounts to taxation of the peasant farmers affecting welfare and creation of a disincentives to production.
iv. Diversion of funds away from growers forward public development agencies has been reduced the off private saving.
v. The application of different prices and stabilization policies to different crops has been a misallocation of resources. This has also in some cases had an adverse affect on the distribution of income between regions and groups of farmers.
vi. The monopolistic position of marketing boards tends to freeze a previous competition situation among traders and [processors.
vii. The system of violating producers from world price fluctuation provides a poor school of enter renews who learn better by having to deal with market uncertainty ( ies ).


D. CROP AND LIVESTOCK DEVELOPMENT AUTHORITIESIN TANZANIA.


During the colonial rule crops were purchased from the peasant
Farmers by the cooperatives societies and exported by the marketing boards. This system continued even after independence up to 1975 when the crops and livestock development authorities were established in order to work or to take over the duties of the cooperative societies. In 1976 the cooperative societies were completely abolished and the crop authorities become dominant purchasers of the agricultural products in the country.
The livestock and crop development authorities however to proved to big burden to the producers and therefore in 1984 were established and again replaced by cooperatives while most of the marketing boards were to perform their responsibilities all the time example Tanganyika coffee board ( TPB ) and Tanganyika pyrethrum board (TPB ).

CROP AND LIVESTOCK DEVELOPMENT AUTHORITIES INCLUDE:

1. TANZANIA COTTON AUTHORITY.

The Tanzania was established in 1973 under the 1973 cotton
Industry act and was in affect in 1974.
The functions of Tanzania cotton authority are:
a) To promote the development and improvement of the cotton industry in Tanzania.
b) To participate by itself or on a company with others in the production ginning of the raw cotton and the processing and manufacturing of cotton seeds and products derive there from.
c) To regulate control and secure the most favorable agreements for the marketing and export of cotton lint.
d) To advice the government on all matters affecting the cotton industry.


2. TANZANIA SISAL AUTHORITY ( TSA )


The Tanzania sisal authority was established in 1974 with the
General mandate to accelerate the development of sisal industry as a whole with direct involvement in production through subsidiary and associated companies such as Tanzania sisal corporation ( TSC ) and Tanganyika sisal marketing association uk limited London (TASMAS) the scope of responsibilities of TSA are similar to those of Tanzania cotton authority ( TCA ) .

3. OTHER CROP AND LIVESTOCK DEVELOPMENT AUTHORITIES ARE:

i. Livestock development authority ( LIDA )
ii. Cashew nut authority of Tanzania ( CATA )
iii. Tanzania tee authorities ( TTA )
iv. Tobacco authority of Tanzania ( TAT )

All the mentioned authorities performed similar specific functions.

THE ROLE PLAYED BY CROP AND LIVESTOCK DEVELOPMENT AUTHORITIES IN MARKETING AND DISTRIBUTION OF AGRICULTURAL PRODUCTS.

In the period they have been in existence, crop authorities had made
various efforts to perform their duties.
i. They regulated controlled and market and exported agricultural products.
ii. They advised the government on all matters affecting of agricultural crop production in the country.


BOARD OF EXTERNAL TRADE (BET )

BET is the government department which was established by the
government to control external trade (imports and exports).
Duties / function of BET
i. It provides or issues licenses to exporters or importers of industrial and agricultural products and other products such as mineral products.
ii. It encourages productions of export industrial products.
iii. It organizes good system and arrangement for industrial and agricultural marketing abroad.
iv. It advices the government on all matters concerned external trade (imports, exports) such as appropriate external trade policies.
v. Provides technical and commercial advices to exporters and importers to in crease their skills, experience and marketing techniques. The board organizes seminars and workshops concerned external trade.
vi. It provides business or marketing with information about the world market situation such as price fluctuations, and condition of demand for a particular product, nature of competition in the world market etc.
vii. The board finances research in external markets.


INTERNATIONAL TRADE

A. Definition :

International trade is the process by which nation exports and
Imports goods and services and financial capital, thus international trade involves exchange of goods services and financial among different nations.

B. DIFFERENCE BETWEEN DOMESTIC AND INTERNATIONAL TRADE

The exchange of goods services and financial capital between
countries is called international trade. On the other hand the exchange of goods services and financial capita within a country is called domestic or inter-regional trade. International trade differs from trade within a country in a number of ways. These are:
i. Immobility of factors of production.
Labour and capital do not move freely from one country.
ii. Direct currencies.
Each country has different currency, thus selling and buying between different countries gives rise to complications are absent in domestic trade.
iii. Payment.

In international trade, payments may be longer delayed and levy certain than that from home trade.
iv. Restriction on trade.

Certain restriction measures are imposed on international trade to restrict import or exports. This is not case in domestic trade.
v. Completion.

At home manufactures may be protected from foreign competition by restrictions imposed, by his own government to overseas markets; the manufacture may have to take competition from producers in that market and from other foreign exporters.
vi. Transport and insurance costs.

The cost of transport and insurance check the volume of free international trade. The greater the distance between the two trading countries the greater are those costs.
vii. Local conditions.

Within the domestic economy there a general pattern of habits, customs, laws and altitudes towards production and consumption but there is no similar pattern in the international economy.

WHY INTERNATIONAL TRADE TKES PLACE?

i. Differences of natural resources between the countries such a mineral resources (coal, iron ore, gold etc) land (fertile, unfertile soil) these results in the production of different commodities in different commodities in different parts of the world.
ii. Differences in climate between countries for examples countries situated in tropical climate with automatically specialize in production of tropical crops such as banana, coffee, cotton etc and these goods will be traded for other commodities. Also country situated in temperate zone are more likely to produce goods like salmon, various fruits etc.
iii. Differences in human resources. The inhabitants of region many develop a special skills for production of a commodity which in time may require a reputation for quality.
iv. Difference in tastes. The lies in preference this means even if the conditions of products were identical in all nations. Countries may engage in trade if their tastes for goods were different.
v. Technological advantage. With the development of technology countries tend to have lower average costs of production, home manufacturing process may enjoy all the economies of large scale e.g. use of automation in production.


THEORIES OF INTERNATIONAL TRADE

There are two main theories of international trade.
i. Classical of comparative cost theory.
ii. Modern theory.

The theory of comparative cost advantage
This theory was presented by the classical economies like Adam
Smith, Ricondo and I.S. Mill . The classical of comparative cost advantage theory that one country will specialize in the production of that commodity in the production of which that country has complete disadvantage. In this way trade will be beneficial for both countries. To explain this theory example of two countries and two commodities have been taken by classical economists. This can be explained by the help of the following example.


COUNTRY   UNITY OF RESOURCES   UNITY OF RICE   UNITY OF WHEATS

TANZANIA                 100                                       1000                        500


UGANDA                      100                                      500                          1000

WORLD
MARKET                      200                                 1500                              1500         



The table shows that the employment of factors of production
On labour in Tanzania will produce 1000 units of rice and 500 units of wheat and the employment of factors of production ( labour ) in Uganda a will produce 500 units of rice and 1000 units of wheat.

Before exchange takes place total world output of rice is 1500 units
And that of wheat is also 1500 units. N.B no specialization of has taken place in both countries. In Tanzania the opportunity cost of 1 unity of rice is 0. 5 unity of wheat (i.e. 1000:1500) therefore Tanzania should specialize in production of rice and import wheat (i.e. 500:100). Therefore Uganda should specialize in production of wheat and import rice from Tanzania. It specialization takes place in both countries, Tanzania moves the resources ( labour ) in the production of wheat. The total world output will increase from 1500 units to 2000 units.

COUNTRY UNITS OF RESOURCES UNITS OF RICE UNITS OF WHEAT LABOUR

TANZANIA                    100                    2000                     0

UGANDA                        100                    0                            2000

WORD TOTAL OUTPUT 200                2000                   2000


Assume the rate of exchange is 600 units of rice to 600 units of wheat them the consumption of each commodity by the two countries will increase then before as shown below.

COUNTRY         UNITS OF RICE                      UNITS OF WHEAT

TANZANIA        1400                                                           600

UGANDA               600                                                           1400

WORD TOTAL OUTPUT   2000                                          2000

As a result of specialization in both countries and exchange Tanzania has increased its consumption of rice from 1000 to 1400 units t the sometime Uganda has increased its consumption of rice from 500 units to 600 units and wheat from 1000 to 1400 units. Both countries therefore benefit from an international trade . The above example assumes that each country can produce one commodity more cheaply than the other . Now assume that one country can produce both commodities move cheaply than the other ( i.e. Tanzania has an absolute cost advantage over Uganda in both commodities as follows:

Country               output per cotton              units of time     sugar

Tanzania                    40 tones                                             60 tones

Uganda                         10 tones                                             30tones.


According to the theory Tanzania should specialize in the production of cotton which has greatest comparative cost advantage and Uganda should specialize in the production of sugar in which it has least comparative cost disadvantage. Tanzania should trade with Uganda by selling cotton in exchange for Uganda’s sugar. Thus each country is benefited by producing the goods in exchange for input of the goods in which it has comparative disadvantage to produce domestically therefore specialization and trade are beneficial to both countries.
Assumptions of the theory of comparative cost advantages

i. There is perfect market i.e. Trade is free from artificial restrictions such as Tariffs, quotas, exchange control etc.
ii. The factors of production are occupationally immobile internationally.
iii. The world in made up of two countries which are trading on two commodities.
iv. There is full employment in all countries.
v. There is no transportation cost at all.
vi. Absence of currency restrictions.


Limitations of the theory of comparative cost advantage this theory appears
To be highly simplified when we try to apply it to the complex real life problems the theory has been criticized from time to time for the following reasons.
i. The existence of different national currencies and banking system complicate international transitions.
ii. Existence of transport costs.
iii. Technological differences among countries make the cost of prices of their good to differ.
iv. Government interference such as the introduction of import duties quota and ban ties etc.
v. The real world is made up of many countries which are trading in numerous commodities instead of two commodities.
vi. Countries involved in international trade are unequal partners. The poor countries produce the primary products whose price are law where as rich countries produce manufactured goods whose s are high. Therefore rich countries benefit for specialization while poor ones will be at advantages.
vii. The assumption that internally the factors of production are mobile but internationally perfectly immobile does not agree with facts. In fact the effect of labour migration and capital movement has a very important bearing an international movement of goods.
viii. The assumption of labour theory of value has ceased to be the entire element cost goods are produced not by labour but only by various combinations of different factors of production.
ix. The theory neglected the demand conditions and concentrate on supply side.


Modern theory of international trade in view of the criticisms to
Which the classical theory has been subjected modern economist rejected it. One of the modern economists is the Swedish economist called Ohh’n who put forward theory which is based on natural endowments of a country. The theory states that , if each country specializes and concentrates on the production of these goods which require a relative high proportion of the factors which it posses in relative abundance trade will be advantageous such as the USA with a considerable capita and abundant training labours can specialize in production of motorcars at a relative cheep coast and land abundant countries such as Australia can concentrate on the production and exportation of commodities such as wool and Tanzania , Uganda and Kenya with an appropriate climate and much unskilled labour can produce and export coffee, cotton, tea etc. At relative low cost Ohh’n said “international trade is the special cases of inter-local or inter-regional trade hence no need to have a separate theory of international trade.



IMPORTANCE OF INTERNATIONAL TRADE

i. Availability of consumer and capital goods in the country i.e. it widens the range of the available goods.
ii. International trade widens the market for country products.
iii. The exchange of goods and services between hations enhance peace, international understanding and cooperation.
iv. Country collects more revenue through tariff import duties.
v. Through international trade country earns foreign exchange
vi. Competition among countries promoter specialization in production and lead to high quality products.
vii. International trade enables less developed countries of transfer technology (ies ) and financial resources from developed states.
viii. International trade leds to an exchange of knowledge and culture between countries involved in such trade links.


FREE TRADE AND PROTECTIONISM:

Free trade:
It is the condition of international trade where nations do not impose any restrictions such as custom duties or other taxes on the imports of goods from other countries. Attempt has made to develop regional areas of free trade eg. BENELUX in 1947 the treat of Rome 1957 which established the EEC – European economic community etc. Never the less there has never been a period when trade between nations has been entirely free.

Protectionism:

Is the practical inference in the free trade protectionism may be carried out in a number of ways:

i. Tariffs or duties
ii. Import (duties) quotas
iii. Exchange control
iv. Government export banties
v. Embargo and economic sanctions
vi. Administration obstacles
vii. Pro-current policies


i. Tariffs

These are duties that imposed on imports so as to rise
Their prices and make them more expensive. They may be charged per unit called specific duties or per value of the commodities imported called advalorem duties these reduce the volume of imports.

ii. Import quotas

These are quantitative restrictions imposed on imported
goods. The practice is to fix maximum quantity goods to be imported for the amount to be imported.

iii. Exchange control

This is the way of restriction of the flow of international
trade restrictions in the amount of foreign exchange to be used by the importers.

iv. Embargo and sanctions


Embargo is where certain types of goods are allowed to
Enter another country which is a discrimination practice on the country’s imports sanctions. Here a group of countries boycott all goods from given country. In other words no trade takes place between the country and the group.

v. Administrative obstacles


Complicated customs regulations or discriminatory
Changes are introduced by the government through its departments such s Tanzania Railways Corporation (TRC) may change higher freight rates on imports than on exports good.

vi. Pro-current policy ( Give priority to have goods )


Since the government and state corporation are
Important purchases of goods therefore they can either buy goods from the cheapest sources whether domestic or foreign products. Thus to act as obstacle to international trade the government can give preference to domestic producers




vii. Export bounties ( subsivation )


These are subsidies granted by the government to
exporters in order to make them compete successfully in over seas market. This means ability to increase the grantity of export product to overseas markets will be determined by the governments ability to grant subsidy to its exporters.


Arguments for protection in international trade

These are various reasons that have been advanced for protectionism in international trade. Some of them are:
i. To restore adverse balance of payment

In periods when imports exceed, exports the imposition
Of custom duties or quotas may be the quickest way of removing the unfavorable balance on current account.
The industrialization process in LDCS takes place at high cost such that the prices of other goods are relatively high while the price of imports from industrialized countries are low hence enable to withstand foreign competition.

ii. It may be necessary to build up essential industries in the country for reason of national security. Therefore heavy industries are protected.     
iii. Ant dumping.

Dumping is the practice where by a monopolists abroad
   sell their products at lower price in overseas market then the domestic ones so as to increase monopoly profits or to interest overseas competition. Thus protection is made to prevent the home market from foreign competition or to protect home market against dumping.

iv. Employment creation.


Protectionism on import forces consumers to spend
Increase goods hence increase of international firms. This makes them to expand production and increase levels of employment in the economy.

v. Certain industries which produce different materials and equipment such as arms, communications, and tanks must be protected.
vi. Strategic reasons.

Some countries protect importation so as to maintain of
living of their people.

vii. Bargaining weapons.


Protection such as custom duties may be imposed as a
retaliatory measure against counties with high tariffs. This can be used as the bargaining weapon in any discussion on the restriction of duties.

viii. Protection is used as the means of raiting government revenue through custom duties.


Argument against protectionism


i. Protected industry (ies ) acquire monopoly power so unable to raise their efficiency of production . The absence of external competition causes the domestic industries to lack incentive for improving the quality of their products.
ii. Consumers suffer due to protection because tariffs and quotas force consumers to consume fewer goods with law quality. Restrictions of imports disprove the consumer’s choice for wide range of goods and services they prefer.
iii. Technical progress comes to stand still due too the lack of foreign competition and incentive to improve the quality of productions.
iv. It is centrally to the principle of comparative cost advantage theory.
v. To restrict imports means in the long run is to restrict exports. This means that leads to reality action by other countries.
vi. Protection too diversely of resources from more productive uses to less productive uses.


Terms of trade

It refers to the values of country’s export which have to be in exchange for its imports or the rate at which a country exchanges on it’s own goods for those of another. The terms of trade can be put in the form of equation as under.

Terms of trade =       value of exports
                                                            Value of imports or
                                                           
                                                                   PX
                                                                    Pm
When Px = Price of export.
                                    Pm = Price in index of import.
                                                                   
                          If p(x) is higher than pm then terms of trade will be favorable and vice versa. In order to understand how the terms of trade may have changed over a period an index number of export and imports may be compared.
The terms are of great significance to a country since they determine the gain that accrues to a country from international trade. If terms of trade move in a country’s favor it will increase gain from its international trade a consequent rise in it’s level of incomes and economic welfare.

Factors determining terms of trade

i. Elasticity demand.

If the demand force the country’s export to relatively less
Elastic s compared with the elasticity of supply of its imports then it is possible that it may be able to enjoy favorable terms of trade. 

ii. Availability of substitutes.

                                                                     
A country may be able to enjoy favorable terms of trade
given the demand conditions if the products exported by it do not have cloze substitute.

Why most of less developed countries have unfavorable term of trade?

The main reasons for favorable terms of trade of undeveloped countries are:

i. Underdeveloped countries export primary products (raw materials) in most cases so the price of these countries is more elastic.
ii. The imports of underdeveloped countries an mainly industrial products then the demand for export is less elastic and price of imports are too high.
iii. Industrialized countries as a group have monopolistic power, they purchase products from LDCS at lower prices at the same trick DCS are major producers of some primary products.
iv. The industrialized countries use synthetic materials as substitutes of natural products from LDCS. Thus less developed countries are compelled to sell their products at an extremely low price.
v. The rich and industrialized countries use protectionist policies to protect their primary products producers from competition with products from less developed countries.
vi. Underdeveloped countries get ways from developed countries and their conditions are too hard.
vii. Underdeveloped countries lack flexibility in their production structure so they are unable to change production when the terms of trade are unfavorable.

Effects of unfavorable (adverse) terms of trade

i. These cause the deficit in the balance of payments.
ii. The rate of exchanges of a country becomes unfavorable.
iii. It creates obstacles in the rapid growth of an economy.


NET BRTER TERM OF TRADE AND INCOME TERMS OF TRADE

1. The net Barter terms of trade means that the rate at which one country’s real products exchanged for those of another.

The net barter terms of trade deals with exchange of real
Commodities rather than many terms this is common or used when single or few goods are exchanged between two countries, with many goods however we need a value of country’s external terms of trade first in terms of money.
The net banker (commodities) terms of trade tells us how much of imports one until of export can buy.

2. Income terms of trade.


It means the local import purchasing power of exports income
terms of trade is simply the value of exports divided by the price of imports (in terms of index number) giving the quantity of import which could be bought.
Income terns of trade expressed as:

(PX)    QX
(PM)

Where PX= barter terms of trade
PM
Q(X) = value of exports

NOTE: Net barter terms of trade is expressed as the ratio of
Px
Pm

MEASURES TO CONTERECT THE EFFECTS OF ADVERSE TERMS OF TRADE

i. The dependency of foreign aid must be reduced; a country should rely mainly on its own resources.
ii. Trade among underdeveloped countries should be expanded.
iii. Import substitution schemes must be adopted
iv. Export promotion policies should be adopted. This means a country should diversity its exports instead of depending on product only.


BALANCE OF PAYMENTS (BOPS)

Balance of payments refers to government sheet for her
transactions with other countries or it can be defined as the systematic records of all economic transactions which take place among individual of a country and the rate of the world. It shows the difference between total receipts and total payments of a country during one year.
This can be expressed as B = RF – Pf
      Where B= Balance of payment.
   Rf = Receipts from foreign countries.
    Pf =Payments to foreign countries.
The balance of payment will be surplus if total receipts are
greater than total payments. On the other hand BOPS is in the deficit if the total payments are greater than total receipts. It will be in equilibrium position if total receipts and total payments are equal.


All the receipts are recorded on the credit side and all the payments made are recorded on the debit side. The BOPS is made up of two points i.e. the current account and the capital account.
i. The current account.

It shows the balance between the exports and imports of visible
invisible items during a particular year. This constitutes all the transactions which are backed up with immediate money payments (i.e. in goods and invisible trade such as trade in services. Shipping tourism, insurance etc.
ii. The capital account.


This shows all long term payments and receipts on capital
items. It shows the balance between the receipt and payments regarding to foreign loans, grants and aids. Furthermore the balance of payments shows both private account and government account. Private account shows the balance between receipts and payments regarding foreign transactions made by private sector while the government account shows the balance between the receipts and payments of those goods (transactions) which are made by the government of a country.


ITEMS AND ACCOUNT                 CREDIT             DEBT
                                                                         RECEIPTS          PAYMENT (-)
1. Current account

i. Visible trade

- Exports                                             x                                    _
- Imports                                              _                                    x

ii. Invisible trade

- Services                                               x                                     x
- Donations                                             x                                     x
                                                                                                   












TOTAL CURRENT CCOUNT                                 a                   b                       c

2. Capita a account

i. Long and short term loans
Grants aids received or provide          X                  X

ii. Short and long term donations             X                X

TOTAL CAPITAL ACCOUNT                                    D                  E                       F

3. Omission + Emv                                               G                             (a+d)-

                                                                                                                               (b+E)

BALANCE OF PAYMENTS                                    a+D+G         b+E             =c+E



BALANCE OF TRADE AND BALANCE OF PAYMENT


Balance of trade represents the different between visible export and
Visible imports are excluded in measuring the balance of trade. When visible export are higher than visible imports the balance of trade is said to be favorable because sales exceeds purchases on the other hand when visible imports exceeds exports the balance of trade is unfavorable . Balance of payments includes exports and imports of goods (visible) and immiscible (services) and capital movements. The balance of payments is said to be unfavorable disequilibrium position when total payments are greater than the total receipts during of a particular year.
Main causes of disequilibrium in the balance of payment
i. Low export
ii. Increase in transports
iii. Climatic situation
iv. Devaluation policy
v. flow or outflow of capita


Methods of removing of disequilibrium in balance of payment
i. Export restrictions.
To encourage exports various facilities are provided in the country by
the government such as diversification of export products.
ii. Import restrictions.  Imports of consumer good are discouraged and imports of producer good are encouraged.
iii. Depreciation.

This means to decrease the external value of home currency. This
means to decrease the external value of home currency. This makes domestic goods to be cheaper for the foreigners and foreigners products are made more costly for home markets. Thus value of exports increase and the value of imports will decrease.
iv. Deflationary policy.

If unfavorable arise due to inflationary trends authorities will adopt
deflationary measures.
V. Greater production.

One remedy of disequilibrium in balance of payments is to increase production where by the volume of exports will be increased.
v. International cooperation.

Attempt has been made to maintain equilibrium in the balance of payments such as IMF and GATT an international institution which help to correct disequilibrium in international payment.
vi. Devaluation policy.

Devaluation means to lower the value of domestic currency in terms
Of foreign currency the rate of exchange between Tshs and USA dollar is as under $ L = 650 Tshs.
We further assume that Tanzania devaluate its currency by 25% then the exchange rates becomes as under
$ 1= 812. 50
Devaluation in currency improves the balance of payments position because the goods of that country become more attractive to import for foreigners due to the cheep prices.
If there continuous deficit on the balance of payments the following methods are used to finance the deficit balance of payments.
i. By drawing on reserves of gold and foreign currency.
ii. By drawing on the IMF or some other international institutions.
iii. By accumulating debts in other countries.
iv. By selling its overseas investment if any.
v. Importation on credits.

The above mentioned methods of financing BOPS through are
Beneficial in short run but in the long they may still exacerbate the investments and repayment of loans at high interest rates in future may drain away the country’s income.

K:    SIGNIFICANCE AND PROBLEMS OF BALANCE PAYMENT

a) SIGNIFICANCE OF BALANCE OF PAYMENT

i. Measures the performance of the country in the world (foreign or international trade. Hence it is whether a net importers or not exporters.
ii. Surplus or deficit position has the implication of increasing or reducing in surportation by the country.
iii. Indicates the amount of foreign reserves in form of currency gold or SDR of the IMF etc.
iv. It forms a part of the wealth of the nation when there is a surplus and reduction in wealth when it shows deficit.
v. An indication of the volume of international trade carried by the country in a year hence the status of the country in international trade.

b) PROBLEMS OF BALANCE OF PAYMENT

The main problem of BOPS are related to the occurrence
ff persistence deficit balance of payments. This condition has the ability of reducing the:

i. Purchasing power of imports of the country hence it’s economic and financial status in the international rate.
ii. Adverse (unfavorable) balance of payments affects the exchange rate of the country’s currency where devaluation has to be made. In case the Dd for exports are inelastic the country will have to reduce them together with other economic measures like physical restriction, exchange control etc.

Discussion questions

1. (a)       Define international trade.
    (b)      Why countries participate cost advantage as used in international trade.
2.   Explain the theory of comparative advantages as used in international trade advantage.
3.   Discuss the different forms of protectionism in international trade.
4.   Discuss the world terms of trade used in international trade and explain why the terms of trade of LDCS are unfavorable?
5.   Discuss the different ways of accommodating deficit in BOPS.
6.    Describe the arguments in favor and against protectionism in international trade.
7.  W hat is the difference between the balance of trade and balance of payment.

ECONOMICCOOPERATION AND INTERGRATION

A:      Definition
Economic integration and cooperation occur when some countries develop special modes of economic cooperation among themselves.
In this simplest form, economic international takes form of removal of trade barriers between the countries which intend to cooperate economically and in its most developed states economic integration may involve a complete political anion of the country.
B: DIFFERENCE BETWEEN INTERNATIONAL ECONOMIC CO-OPERATION AND INTERNATIONAL INTERGRATION

1.          International economic co-operation.
When different nations in the world joining or working together for a common purpose (i.e. when different political peace and other limited erodes ) example of international economic co-operation are united nations organization and its agencies, common wealth, Non alignment movement ( NAM) organization of Africa unity OAU now AU.
2. International economic integration

This exists when some of countries of certain region unite and form a special mode of regional economic group for a common purpose such as East African community (EAC) the economic (community) commission of West African states (ECOWAS) the southern African development community states (SADEC) common market in the Eastern African and southern African states (COMESA) ,The European economic community ( EEC) etc.

C: INTERNATIONL ECONOMIC INTERGRATION

1. Introduction.
Several regional economic groups have been formed in different parts of the world while some have risen and fallen and the number still survives.
The primary aim of economic integration is the achievement of a faster rate of economic growth of the country (ies) involved that would otherwise impossible.
Economic integration is based on the theory of comparative cost advantage to increase the total world output of goods and services to be traded in the world by almost utilization of scare available resources.

2. Forms of economic integration.

There are about SQ forms of economic integration in the world these are:
i. A free trade area.

The countries involved may device to abolish tariffs and quotas on
Mechanize trade between them.
The free trade area is characterized by:
- Complete freedom for the movement of goods between participation countries.
- Each country has independent trade policies (tariffs, quotas etc) against the countries not belonging to free trade area.
- Restrictions among member countries on the movement of capital management and labour.

ii. Custom union.

The joining countries device to remove not only tariffs quotas but also adopt
a join trade policy against the rest of the world.
The custom union is characterized by:
- A join trade policy against the rest of the world (i.e. common tariffs for the trade with non- members.
- Restrictions among members on the movement of capita management and labour.
The main difference between custom union and free trade area is that in
Custom union the tariffs with non-members are common contrary to the free trade area. Example of custom union is BENELUX established in 1979.

iii. Common markets.

The removal of restrictions on factor movements (capita management
Labour ) in a custom union result in a common market.
A common market is characterized by:
-    A complete freedom on the movement of commodities and all factors of production.
-     All members have the common policy on trade against non-members countries. For example of E.A.C. ECOWAS etc

iv. An economic union.

Member countries try to harmonize their economic policies to certain extent
In addition to those measures which characterize a common market an economic union is characterized by:
- Attempt to harmonize economic policies such as common tax policies, social security systems, transport policies, rule of competition and fiscal policy.
- It takes all resources which characterized by a common market. Examples EEC= European Economic Community formed in 1957, C.M.E.A= Council for national economic assistance which formed the specialist common markets of Eastern Europe.

v. Sectoral economic integration.

It is a special case of integration. This is where one or two or more economic
Sectors are integrated such as TAZARA, US-Canadian automobile agreement.

vi. Total economic integration.

This is the final stage of economic integration which involves complete
unification of macro-economic policies and political matters. The main features of total economic integration are:
- Central monetary policy.
- A common currency or absolute fixed exchange rate between member currencies.
- A common budget.
- Apolitical system which makes economic decisions binding all members of the political union.

ADVANTAGES OF INTERNATIONAL ECONOMIC INTEGRATION

The joining or unifying countries have to benefit from themselves in the following ways:
i. Trade creation effects.

The absence of trade restrictions among members countries provides an
opportunity specialization and increased trade so that resources are effectively used and commodities are increased.
ii. Expansion of market.

The joining countries benefit from increased side of market for their
Products .This enhance economies of large scale production and conducive for large scale industrial development.
iii. Factors mobility and restriction of income among members becomes possible.

The free movement of factors of production has the effects of ……….Ben of
competition among producers. This increases production efficiency of the firm.
iv. International leverage.

Regional economic grouping inverse the union bargaining at international
fought.
v. Consumers of the members can get commodities at low prices.
vi. It encourages the production of those commodities that can be produced cheaply in the country so it is helpful to maximize production at low cost.
vii. It contributes to the rapid economic growth of the countries involved.

PROBLEMS OF INTERNATIONAL ECONOMIC INTEGRATION

The economic integration is not free of disadvantages. Some of the problems are:
i. The distribution of over all benefits of the union may be uneven among the partners so that development is polarized in the region.
ii. The movement of goods and factors of production among the partners involves a less revenue collected from custom duties
iii. Economic integration may involve purchase of inferior and or exposure goods from the partners.
iv. Danger to break up is high because of ideological differences.
v. In case of free trade a country can not be self sufficient in the production of different products.
vi. A country may remain less developed because more industries are not established.
vii. Some of the commodities may be imported from path ness which is harmful from the society welfare point of view.


D: CASE STUDIES OF ECONOMIC INTEGRATION

1. SADC-THE SOUTHERN AFRICAN DEVELOPMENT COMMUNITY.
The SADC is an association of eleven countries from central and southern
Africa. Member countries are ANGOLA, BOTSWANA, LESOTHO, MALAWI, MOZAMBIQUE, NAMIBIA SWAZILAND, TANZANIA, ZIMBABWE and the REPUBLIC OF SOUTH AFRICA.
SADC formed to replace former southern Africa development co-ordination conference former southern Africa development conference SADCC which come into existence since 1980, the former objectives of SADCC had been to help the southern African nations to become self reliant instead of depending on South Africa and other nations. In April 1995, the heads of states of member states met in Mbabane Swaziland. They rectified the treaty to change the former objectives of SADCC to SADC.

OBJECTIVES OF SADC

This cove economic and political carries
i. TO help member states to secure genuine and equitable regional integration.
ii. SADC aims at mobilizing resources from the region and regional policies that are of benefit to the member states.
iii. It aims at fostering interring international co-operation.
iv. To share skills and reduce dependence from the highly developed states ( the vort)
v. To develop economic sectors and expand internal markets in order to reduce dependence economically on the outside world.
vi. To increase bargaining power in the international forum.


ECONOMIC BASIC FOR SADC
The above objectives are to be realized through:
i. Improve trade arrogant member countries.
ii. Improve transport and communication links and systems.
iii. Development of agriculture and industrialization.
iv. The development and training of manpower.
v. The development of harnessing energy and energy resources.
vi. Industrial development and use of appropriate financial policies.


PRIORITY FOR SADC

Top priority for SADC is placed on development of transport and communication. It is helped that this will stimulate agricultural and industrial development and thus reduces decency on other nations.

PROBLEMS FACING SADC

i. SAD members tend to cater for natural interest first before SADC’S.
ii. The member nations have attained different levels of economic development this lead to inequality in the distribution of the benefits derived from SADC under takings. The nations getting the smallest share get discouraged.
iii. The SADC has weak financial bases thus the member rely on external aid.
iv. The SADC lacks qualified and skilled manpower to run it. It forced to rely on technical assistance from the developed nations.
v. The member countries of SADC produce similar agricultural commodities such as coffee, cotton, maize, tobacco etc therefore then compete against one another in both regional and world markets. This tends to lower the prices offered for their exports.
vi. Prices for raw materials keeps on fluctuating in the world market this leads to low earning and weak national financial base.
vii. Sabotage problems such as UNITA to Angola.
viii. Some member states are also one country to participate fully in two different organizations eg Tanzania is member of SADC and COMESA.



ACHIEVEMENTS
In spite of many problems it faces SADC has made some achievements for
Example, it has created employment to it’s member co-operate in transport and communication, Airways, Harbor and Railway etc. Further more source of the member states through joint venture undertook to promote development projects such as electric plants (Tanzania + Zambia agreement).

2.    COMMON MARKET FOR ESTERN AND SOUTHERN AFRICA (COMESA)

Before member 1993 COMESA was known as Preferential trade area for eastern and southern Africa (PTA) on 6th Nov. 1993 the heads of the states met in Kampala and signed a treaty which created COMESA INSTEA of PTA. The COMESA members are KENYA, UGANDA TANZANIA, RWANDA BURUNDI, MALAWI, ZIMBABWE, MAURITIUS, COMOROS ISLAND, DJIBOUT SUDAN ETHIOPIA, SOMALIA AND SOUTH AFRICA. The headquarters of member states the organization has team of exports constantly making recommendations for the improvement of it’s performance.

OBJECTIVES OF COMESA ARE TO

i. Promote and facilitate cooperation of the member countries in trade, industry agriculture, transport and communication.
ii. Harmonize and co-ordinate development strategies, policies and plans within the region.
iii. Encourage co-operation in monetary and financial affairs to facilitate sub-regional integration.
iv. Establish joint industrial and agricultural institutions with the aim of increasing the sub-region production capacity.
v. Make trade much easier within the region through a reduction and eventually eliminate tariffs.
vi. Build a strong economic base for (the) its members as a step forwards economic independence of the region.


ORGANS AND OPERATION OF COMESA

The organs of COMESA are
-The authority (head of states)
-The council of ministers
- The secretariat
- The tribunal, laws and regulations
-  The commission and
-  Comities

i. Authority

It consists of the heads of states and government states. It is responsible for
Considering matters of general policy and gives the general direction and controls the performance of the executive functions of the COMESA the authority normally meets one every yeast. It may hold an extra ordinary meeting.

ii. The council of ministers

It consists of such ministers as may be designed by each member state.
The council ensures the proper functioning with the provisions of the treaty.
It makes recommendations to the authority on matters of policy. It gives direction to all other subordinate.
It gives direction to all other subordinate institutions of the COMESA ( PTA).
It exercise such other power and perform such other duties are imposed on it by the treaty. The council meets at least twice a year.

iii. Secretariat

The secretariat is headed by the secretary general who is appointed by the
Authority the secretary general service for a term of four years he may be re-appointed.

ACHIEVEMENTS AND PROBLEMS

ACHIEVEMENTS:
i. It’s members states have become cooperative in the field of trade industry and agriculture.
ii. The organization hs lunched a bank the trade and development bank which finances trade and development projects. Its headquarters is in Bujumbura Burundi.
iii. The COMESA has created its own currency VAPTA.
iv. The establishment of quartering schemes and creation of the intra COMESA vehide insurance system. The yellow cord.

PROBLEMS OF THE COMESA

i. Different levels of development of member states.
ii. Poor transport , shipping facilities and communication links.
iii. Multiplicity of currencies with different strengths as compared to major currencies.
iv. Source of member states of COMESA are also members of other organization such as SAPC.