It is widely accepted that countries’ institutions play a major role in their economic development. Yet, the way they affect, and are affected by, development, and how to reform them are still poorly understood. In this companion volume, State and Business in Tanzania diagnoses the main weaknesses, root causes, and developmental consequences of Tanzania’s institutions, and shows that the uncertainty surrounding its development paths and its difficulty in truly ‘taking off’ are related to institutional challenges. Based on a thorough account of the economic, social, and political development of the country, this diagnostic offers evidence on the quality of its institutions and a detailed analysis of critical institution- and development-sensitive areas among which state-business relations rank high, even though the institutional features of land management, civil service and the power sector are shown to be also of prime importance. This title is also available as Open Access.

It is widely accepted that countries’ institutions play a major role in their economic development. Yet, the way they affect, and are affected by, development, and how to reform them are still poorly understood. In this companion volume, State and Business in Tanzania diagnoses the main weaknesses, root causes, and developmental consequences of Tanzania’s institutions, and shows that the uncertainty surrounding its development paths and its difficulty in truly ‘taking off’ are related to institutional challenges. Based on a thorough account of the economic, social, and political development of the country, this diagnostic offers evidence on the quality of its institutions and a detailed analysis of critical institution- and development-sensitive areas among which state-business relations rank high, even though the institutional features of land management, civil service and the power sector are shown to be also of prime importance. This title is also available as Open Access.

The final chapter first aims to synthesise what has been learned from the previous chapters, emphasising the institutional challenges that have been identified there and identifying the main common factors behind those challenges, as well as the policies and reforms most able to weaken their effects. Most of the identified institutional challenges in theTanzanian economy result from a small number of basic institutional weaknesses, which logically form the core of our final diagnostic. In turn, these weaknesses are shown to be the symptoms of dysfunctional institutions that the diagnostic seeks to identify by delving into the proximate causes of identified weaknesses, and then by investigating the deep political economy factors likely to prevent corrective action. Even though political economy considerations rarely lead to consensual policy reform recommendations, they may point to general principles that may guide the reflection of policy makers, political actors, and civil society when thinking of potential reforms. The concluding pages of the chapter insist that transparency and accountabilty are two of these principles.

This chapter provides a description and an analysis of the relationship between government and the business sector, mostly large firms, a key aspect of Tanzanian development. The situation observed today, with a lack of a well-articulated industrial policy and the executives volatile attitude with respect to market rules and the role of big business, may be seen as strongly path-dependent in a country that went in a few decades from a colonial market economy to a socialist nationalized economy and then transitioned back to the market amid great disorder. The chapter emphasises several key challenges in the regulation of the business sector. The most important of these is the strong link between businesspeople and factions within the dominant political party, whose interests may diverge from those of the executive. The chapter elaborates on the need for better central control by the government to counteract this situation, while drawing the lessons of a move in that direction by the previous president. In her discussion of the chapter, Hazel Gray underscores the downsides of too much centralisation while emphasising the regional dimensions of Asian-led firms’ strategies.

This chapter sets the scene for the Institutional Diagnostic exercise by presenting the main geographical, demographic, and recent historical features of Tanzania, emphasis being put on the latter aspects. It proves crucial in understanding where Tanzania’s development stands today, as well as the recent disruption in Tanzanian politics caused by the presidency of Magufuli and his premature death.