Public investment and poverty reduction in Tanzania: Evidence from household survey data

Abstract

This chapter analyzes how public spending priorities might be changed to contribute more effectively to reducing poverty. The specific objectives are: (1) to review and document changes in the level and composition of public investment in Tanzania, and the reasons behind these changes; (2) to estimate the growth and poverty impacts of different types of public investments and the interaction effects that can arise between them; and (3) to provide guidance on future priorities for government investment. Because of the diversity of agroclimatic conditions in Tanzania, which determine the comparative advantage of a location with respect to the costs and risks of producing different commodities, the costs of and constraints to marketing, local commodity and factor prices, and the opportunities and returns to alternative income-generating activities both on and off the farm, the analysis is undertaken at national and regional levels. The regions used in the analysis are as follows:1 • Northern zone. This zone includes Arusha and Kilimanjaro. The zone has a rainfall of 1, 000 mm or more per annum. The major agricultural commodities are coffee, bananas, and dairy products. The zone is part of an important tourist area which provides good non-farm opportunities for local people.