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date: 29 September 2020

Abstract and Keywords

This chapter examines economic transformation in Tanzania, with a focus on the nature of micro, small, and medium-sized enterprises. Between 2002 and 2012, Tanzania experienced economic growth more rapidly than at any other time in recent history. Labour productivity growth was largely accounted for by structural change and the rest by within sector productivity growth in agriculture. Using data from Tanzania’s Micro, Small and Medium Sized Enterprise Survey (MSME) 2010, the chapter analyses labour productivity, employment growth, and business owners’ self-reported motivations for owning a business, along with the productive heterogeneity and job creation of small firms. It also considers some policy lessons from the Tanzanian case, arguing that policies targeted at the MSMEs with potential for employment and productivity growth may have larger payoffs than blanket policies that offer assistance in the form of business training and access to credit. The chapter concludes with recommendations for policy makers.

Keywords: economic transformation, Tanzania, MSMEs, economic growth, structural change, agriculture, labour productivity, employment growth, small firms, job creation

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