May 19, 2016 - 1:10 AM EDT
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Deploying Strategic Industrialization for Economic Growth

The President, Dr John Pombe Magufuli has declared industrialization as the main agenda of his government. This is great news for our country and every countryman/woman must support the President. Indeed, industrialization is the way to go.

There is no developed country on earth which did not industrialize its economy. To keep the colonized countries poor, the Western powers prevented industrialization in their colonies.

This was done deliberately to make sure that the colonized world remains the source of raw materials for the Western industries and also market for their manufactured goods. This made colonies ever dependent on the West.

This dependency has continued and in fact it was fully institutionalized by the establishment of the Bretton Woods Institutions in the post World War II era. The industrialization process is key in breaking the dependency relationship between the West and their former colonies.

In other words, industrialisation is a continuation of the struggle for liberation of poor countries. Industrialisation in fact should have been done yesterday; therefore it must be done rapidly because it is the only way that will uplift millions out of poverty.

New industries must be nurtured and protected by the government until they are ready to compete in the market through various policy tools including imposing high tariffs to imports and introducing quotas.

This is what all the industrial countries did to protect their domestic industries. A distinguished Asian born and Cambridge professor, Ha-Joon Chang in his seminal work titled: Bad Samaritans where he severely criticizes the Western powers for proposing development policies to poor countries which perpetrate poverty. In his other book titled Kicking Away the Ladder, he severely indicts the Western powers of being hypocrites.

He argues the Western powers deliberates prevent poor countries from adopting policies that they themselves used to get into their present economic status. The Western powers insist that the governments should withdraw from economic activities and let the market run the economy alleging that markets are efficient.

The policy package of the Washington Consensus was to give full reign to market forces.

These policies are not what the developed countries used to get rich. After all, Adam Smith, a classical economist and the progenitor of the free market did not himself believe 100 percent in the unregulated market that is why in his Wealth of the Nations he warned that markets could not be left to their own devices. The government everywhere has to, and in fact, do regulate the economy to a certain extent.

This is reflected in the fact that all developed countries used industrialization and protectionism to protect their nascent industries from foreign competition. The United State did that in the early 19th century to protect its industries against European competition.

Between 1864 and 1913 the US was the most heavily protected nation on earth. Perhaps there is no nation on earth which benefited from protectionist policies like Britain. The industrial revolution was built on protectionism: in 1699, for example, Britain banned the import of Irish woolens; in 1700 it banned cotton cloth from India.

To protect its infant industries, it also imposed ferocious tariffs on almost all manufactured goods. The same strategy was followed by Japan, South Korea, Taiwan and almost every other country that is rich today.

It is the government-led industrialization that will be effective. The truth is that the private sector is interested in making profit, normally short term profits. The main objective of any business venture is to maximize the shareholder wealth.

As such the interests of the private businesses are short-term and narrow whereas the government objectives are wider and long term.

The strategic long term objectives of any government include employment generation, national security, general public welfare and sustainable development. In order to create massive jobs the government must invest in labour intensive industries such as textile industries.

The government also must establish industries in order to add values to local raw materials so that to create synergic effect in other sectors of the economy. Industries that will use natural gas as a feedstock, mineral processing industries and food processing industries will be critical in this regard. Industrialization must ensure mechanization of agriculture so that to improve productivity and add value to agricultural products.

This, in turn, will not only have a synergic effect on other sectors of the economy, but will provide massive employments to the poorest populations. It is good that our President has grasped this fundamental truth that industrialization is the way to go for the nation. The Government policy on industrialization must be directed to achieve certain strategic objectives of the country.

In addition, the Government must focus on development of strategic industries which will have high impact industries. One of these industries, is the automobile industries.

In Japan, for instance, the development of Toyota Company was championed by the Japanese government despite the US opposition. Today, Toyota is the largest automobile company in the world. Likewise, in the late 1960s, South Korea started the Hyundai car manufacturing company despite the Western opposition and in defiance to neo-liberal economic canon.

Today, Hyundai is among the enviable automobile brands in the world. Automobile industries will save the foreign currencies which at the moment are used to import cars from abroad.

This seriously impacts on the nation's balance of payments and the attendant consequences of devaluation of our currency. It may sound crazy at this point and some readers will be asking a lot of questions. How can Tanzania manufacture cars to compete with the like of Mercedes Benz, Ford and Land Rover?.

How can we impose trade barriers in contravention of the international trade regime (GATT, GATS etc)? We are not the first; the Japanese did it in the post WWII era. The Koreans did it in the 1960s and 1970s.

We can also do it. Yes, they faced stiff opposition from the West but they overcome. Therefore, it is not going to be easy. The West will oppose us because that will be a threat to their export to our country.

But as the Swahili say goes, Ukitaka cha uvunguni lazima uiname! Now that we have a determined President, who has a vision lets us take aggressive stance in this direction. Yes, we can!

The author is a Senior Legal Officer with the Ministry of Energy and Minerals. He holds a first degree in law from UDSM and an LLM (International law) from Warwick University in UK, an LLM (Oil and Gas law) from Robert Gordon University in Scotland and an MBA from Mzumbe University

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Source: Equities.com News (May 19, 2016 - 1:10 AM EDT)

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