World Bank Document

Public Disclosure Authorized

Public Disclosure Authorized

152S(4

PSDOccasional Paper No. 18

September 1995

8 >

Economic Strategy and

StructuralAdjustment in Tanzania

Brian Van Arkadie

Public Disclosure Authorized

Public Disclosure Authorized

I R I The World Bank Private Sector Development Department

Private Sector Development Department Occasional Paper No. 18

EconomicStrategyand StructuralAdjustmentin Tanzania

BrianVan Arkadie October 1995

This paper has been clearedfor inclusionin the occasionalpaper series by R. ShyamKhemani, Manager,Competition& Strategy. The viewsexpressedare thoseof the author(s)and shouldnot be attributedto the WorldBank. Thispaper formspart of a forthcomingvolume,Leila Frischtak and IzakAtiyas(eds.),"Govemance,Leadershipand CommunicationB: uildingConstituenciesfor EconomicReform." The World Bank Private Sector Development Department

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Contents

1. Origin of the Economic Crisis.....................................................

1

Radical Change Following Independence.............................................................. I

The Agricultural Institutional Environment............................................................ 5

1973: The First Economic Crisis and the Response............................................... 7

1979: The Second Economic Crisis ..................................................... ......... 8

Governance and the Managed Economy..............................................................

10

2. The Politics of Reform: Economic Disequilibrium

as a Source of Change.....................................................

15

3. The Reform Process ..................

...................................

23

Resistance to Change and First Steps to Reform: 1979-84 ...............2.3..........

Resistance to Exchange Rate Adjustment ..................................................... 25

The Reform Process: 1984-93 ...................................2.8.................

The Slow Pace of Parastatal Reform ........................................................

31

4. The Distributional Impact of Reform.............................................. 35

5. Sustainability of the Reform Process............................................ 39

The Momentum of Economic Growth ........................................................

39

The Managerial Capacity of the State ........................................................

41

6. The Role of Donors.....................................................

45

7. A National Vision of Development?............................................... 51

Bibliography

..

55

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