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STATISTICS AND THE NON-MARKET ECONOMY Agricultural statistics, GDP and poverty in Tanzania

STATISTICS AND THE NON-MARKET ECONOMY Agricultural statistics, GDP and poverty in Tanzania. Introduction. In many least developed non-oil exporting countries, small-scale agriculture remains a crucial activity for majority of the population

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STATISTICS AND THE NON-MARKET ECONOMY Agricultural statistics, GDP and poverty in Tanzania

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  1. STATISTICS AND THE NON-MARKET ECONOMYAgricultural statistics, GDP and povertyin Tanzania

  2. Introduction • In many least developed non-oil exporting countries, small-scale agriculture remains a crucial activity for majority of the population • In Tanzania the non-market economy is largely subsistence agriculture. • Small-scale agriculture is affected by the weather and difficult to measure. • Our paper draws attention to the effects on GDP and poverty assessment

  3. Users’expectations • Part of the difficulty lies in the expectations of users and the interpretation of GDP growth rates • In well-developed economies, the annual growth of GDP varies within a relatively narrow range, i.e. between 1 and 4%, not too low and not too high • In least developed economies like Tanzania, relatively large fluctuations in the annual growth rate and (poverty levels) are quite possible, depending on the weather

  4. Agricultural production • Very challenging to measure for all crops; but it is essential for GDP. How is it measured? • In 2003 a large sample survey of agriculture • Not conducted every year so no use for GDP

  5. Data problems on measuring non-market crop production • Direct comparisons with the recent agricultural survey were not possible because of the different years in which the surveys were conducted • Producers tend to understate their output in agriculture in household based surveys • Root crops especially seem understated • Lack of a (one stop) reliable source of data and long the intervals between household budget surveys

  6. Implications for GDP growth and poverty • Changes in the weather usually have a huge effect on agricultural production • There is little doubt that the quantity of output may fall by at least ten % below the level obtained in a good year, with a compensating rebound if a good year follows • Given the importance of agriculture in the economy, incorporating these swings has a significant effect on the annual growth rates of GDP measured at constant prices

  7. Implications for GDP growth and poverty…continued • Over the past few years the agricultural component of GDP estimates has been being smoothed out to:-reduce impact of savings; to avoid too much reliance on inadequate data • This meets expectation of users, but the GDP may not show the real short-term effect that drought or good weather may have on the economy

  8. Measurement of poverty in Tanzania • Poverty, as measured through the consumption levels of households, is also affected by the weather • In Tanzania the number of people in households falling below the poverty line may vary substantially from one year to the next • In most African countries, household budget surveys are undertaken once every five years at best

  9. Measurement of poverty in Tanzania…Continued • If the year of the survey turns out to be exceptional, the issue is whether the comparison will be valid • Policy-makers may feel justified in ignoring the results of the survey in such a case: which would be an expensive statistical failure

  10. Conclusion • The question is then how can we improve Collecting data on households’expenditures is likely to provide better information than collecting data on income, and especially income derived from informal activities • We need to consider seriously the possibility of including a continuous mini-HBS in our regular core programme of statistics • The idea of a continuous HBS is not new. Several more developed countries have one. • It will be expensive and challenging

  11. Bibliography • Cletus P. B. Mkai and Tim Jones • National Bureau of Statistics, Tanzania • And • Oxford Policy Management, UK • Cape Town, South Africa • 6 September 2005

  12. Users’expectations…continued • Economists are not used to this • It makes forecasting difficult • In Tanzania, many would interpret a 4% GDP growth as a huge fall if it was following a 10% growth in a previous year • But this is over 14 % in two years

  13. Agricultural statistics and GDP • The share of non monetary of all sectors in the economy is 29 percent • In 2003 the share of agriculture non-monetary production in the total economy was 19 percent • Approximately two thirds of all non –monetary output in the Tanzanian economy is a product of agriculture • It’s a challenge to measure small scale agricultural production in Sub-Saharan Africa

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