This paper is the first comprehensive study of Tanzanian Diversified Business Groups (DBGs) – conglomerates that encompass a variety of inter-linked, market-based economic activities, which are organised to complement the overall operation of an entire business. DBGs can serve as an important vehicle for industrialisation in developing countries, with their enhanced diversification capacity having often overshadowed other private-sector activities. The ability of these groups to instrumentalise rents towards productive and unproductive activities ultimately determines their contribution towards economic growth
Based on a combination of primary fieldwork and secondary research using quantitative and qualitative research methods, we analyse the history and contemporary structure of leading DBGs, with a view to better understanding the dynamics of state–business relations in Tanzania. Combining three strands of literature – including theories of DBG diversification, political settlements and regulation theory – this paper offers a novel analysis of DBGs in developing countries by focusing on ‘Regimes of Capitalist Accumulation’(RCAs).
RCAs periodise the evolution of different DBGs by embedding the traditional concept of the theory of the firm in political economy contexts. In effect, RCAs offer an analytical lens to study private-sector accumulation and raise important questions about the conditions which can lead to efficient and inefficient rent allocation.
DBGs can serve as an important vehicle for industrialisation in developing countries. Their enhanced diversification capacity often overshadows other private sector activities. The ability of these groups to instrumentalise rents towards productive and unproductive activities ultimately determines their contribution towards economic growth. The relationship between RCAs and a DBG’s effective utilisation of rents is captured in the concept of ‘organisational integration of rents’. In short, this integration encapsulates the nature of businesses in being simply rent-driven and/or reinvesting rents in a portfolio of businesses which then respond to different market incentives.
By focusing on DBGs and their various paths towards rent absorption, this paper complements other sectoral research by the SOAS Anti-Corruption Evidence (ACE) programme. It identifies the potential of the private sector as an enabler of structural change as well as an obstacle towards efficient industrialisation. The paper also offers a framework for analysing the evolution and transformation of DBGs in developing countries in the context of late industrialisation, which is markedly different from the experiences of many developed countries.
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