Food production and the growth of manufacturing: the case of Tanzania

Purpose - The purpose of this paper is to analyze the impact that slow growth in staple food productivity can have on the process of structural change and, more importantly, on the development of labor intensive industry. Design/methodology/approach - A theory of a semi-open economy is developed to analyze the role of staple food productivity on structural change. A case study is used to illustrate the workings of the model. Findings - Slow growth in food staple productivity will mean that even when labor is physically abundant, it will not be economically cheap. Thus it will be extremely difficult to promote the expansion of labor intensive manufacturing. The key to rapid structural change is rapid growth in food staple productivity. Practical implications - Investment in raising agricultural productivity is critical in the development of labor intensive manufacturing. Social implications - Rapid growth can occur without leading to structural change. The bulk of the population remains locked in the rural sector. Originality/value - The food sector is shown to be largely non-tradable. As a result solving the food problem domestically is crucial for structural change and economic development. Labor intensive manufacturing needs relatively cheap labor. For labor to be cheap, agricultural productivity (food staples) must rise rapidly.