Business Groups in Tanzania

Capitalist Accumulation and Corruption

Summary:

Private sector corruption is usually a result of the collusion between powerful economic and political interests. At early stages of economic development these links are often used to monopolise certain government subsidies or policies. Some of the monopolising firms use these to protect their inefficiencies and capture policies. They cannot be profitable without these subsidies and remain consistently inefficient.

Even though some groups were initially granted policy ‘breaks’ only because they had forged links, they also used the policies to upgrade their productivity and become competitive. Some of the more powerful and economically capable firms in developing countries including in ACE’s countries did exactly this. These firms lay the foundations for a competitive local sector despite their origins being in corrupt relationships at odds with the benchmarks of good governance.

This cross-country project will trace the evolution of such local firms and analyse their impact on growth in their respective sectors. It will attempt to isolate proactive policy from their experiences to help reduce the need for collusion along with providing the correct incentives for local firms that want to invest.

Partners: Antonio Andreoni (SOAS) and REPOA

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