APPP Research Report 01. The political economy of the investment climate in Tanzania.
Abstract
Although Tanzania suffers from an imperfect form of liberal democracy and high levels of corruption, it has attracted unprecedented levels of foreign investment over the past fifteen years, and is predicted by the IMF to be one of the fastest growing countries in the world over the next decade. This provides some grounds for thinking that Tanzania represents a case of ‘developmental patrimonialism’, a type of regime that achieves development without conforming to ‘good governance’ orthodoxy.
This Research Report rejects that idea. Drawing links between the management of economic rents and the climate for business and investment, it shows that rent-management in Tanzania remains largely decentralized and undisciplined, with deleterious consequences for investors. In previously fast-growing sectors like mining, investors are increasingly circumspect, while high potential areas like horticulture appear largely ignored. The result is that recent increases in economic growth – which have yet to have a discernible impact on poverty reduction – are likely to be ephemeral. Tanzania, we conclude, is a case of ‘non-developmental patrimonialism’, and its regime is likely to face a mounting legitimacy crisis in coming years.
The report is structured as follows. The Introduction discusses the link between rent-management and economic performance in comparative perspective, as well as introducing other important concepts, including ‘relationship-based governance’ and ‘developmental patrimonialism’; Section Two looks at the structure of rent-management across Tanzania’s post-colonial history; Section Three examines the impact of rent-management on public goods production and the investment climate in Tanzania over the past decade; Section Four analyses the political economy of the investment climate in export horticulture, while Section Five does the same for gold mining. In the Conclusion we discuss the contribution of institutions, political culture, and external relations to Tanzania’s non-developmental equilibrium, before commenting on some possible avenues of change.
Citation
Cooksey, B.; Kelsall, T. The political economy of the investment climate in Tanzania. Africa Power and Politics Research Report 01. (2011) 1-98.
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