Three essays on agriculture and economic development in Tanzania

One cannot study poverty in Tanzania without understanding the agricultural sector, which employs more than two-thirds of the population and accounts for nearly a quarter of national GDP. This thesis examines three themes that focus on the difficulties that rural Tanzanians face in achieving a reasonable livelihood: the adverse legacy of a failed historical policy, a difficult climate, and market failures. The first empirical chapter examines the legacy of the villagization program that attempted to transform the predominantly agricultural and rural Tanzania. Between 1971 and 1973, the majority of rural residents were moved to villages planned by the government. This essay examines if the programs effects are persistent and have had a long-run legacy. It analyzes the impact of exposure to the program on various outcome measures from recent household surveys. The primary finding of this study is that households living in districts heavily exposed to the program have worse measures of various current outcomes. The second empirical chapter examines the role of reliability of rainfall, which is important in Tanzania as agriculture is predominantly rain-fed and a small fraction of plots are irrigated. This chapter investigates if households cope with this major risk to income by re-allocating their labor supply between agriculture, wage labor, and self-employment activities. This chapter combines data on labor allocation of households within and outside of agriculture from the National Panel Survey with high-resolution satellite-based rainfall data not previously used in this literature. The primary finding of this study is that households allocate more family labor to agriculture in years of good rainfall and more labor to self-employment activities in years of poor rainfall. Market failures are often cited as a rationale for policy recommendations and government interventions. The third chapter implements four tests of market failures suggested in the literature, all of which rely on the agricultural household model but differ in how market failures are manifested. The common finding of these tests is that market failures exist in agricultural factor markets in Tanzania, although significant heterogeneity exists. Markets are more likely to fail in rural areas, remote locations, and are more likely to affect female-headed households. Households are also more likely to face market failure when they try to supply labor to the market than when they try to hire labor from the market.