Essay On The Role Of Outsourcing In Tanzania

CHAPTER 1
INTRODUCTION
1.1 Background of the Study
While in the last touches of World War II, in 1944, when the world was resuming to normality, an international agreement commonly known as Bretton-Woods Agreement was signed for resetting a way through which countries can exchange their currencies and hence carry out trades between them. This came following the collapse of Gold Standard and the financial chaos in Europe and America (Great Depression of 1930s). Under Bretton-Woods system, countries could trade between them using exchange rates maintained within fixed values, once exchange rates between currencies established, governments were intervening to prevent them from deviating for more than one percent (1%) from the original set level. And most of currencies were pegged to either US Dollar or British Pound. Unfortunately, by 1971 it came to light that the US Dollar to which some of currencies were pegged had been overvalued and hence greatly suppressed its demand i.e. more dollars were in supply than what demanders could afford to buy because of overvaluation. This called for a review of the exchange rate regime and finally US Dollar devalued relative to other currencies, and currencies

And like many developing countries, SSA countries in particular, exchange rate regimes emerged in a controversial fashion. The country right after independence in 1961 (Mainland Tanzania) entered the first era of financial system, an interim-like phase, six-year period from 1961 – 1967. This is the period where the country was in deep analysis trying to define her way forward in economic direction. The practice during this time was import substitution industrialization (ISI) which aimed at boosting income growth. In this phase, private business venture and those foreign ones were given tariff protection and guarantee against nationalization by the government. Rweyemamu