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Economic Transformation in Africa from the Bottom Up: New Evidence from Tanzania

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  • Xinshen Diao
  • Josaphat Kweka
  • Margaret McMillan
  • Zara Qureshi

Abstract

Tanzania's rapid labor productivity growth has been accompanied by a proliferation of small, largely informal firms. Using Tanzania's first nationally representative survey of micro, small, and medium-sized enterprises (MSMEs)—this paper explores the nature of these businesses. It finds that these firms are located in both rural and urban areas and that they operate primarily in trade services and manufacturing. Roughly half of all business owners say they would not leave their job for a full-time salaried position. Fifteen percent of these small businesses contribute significantly to economy-wide labor productivity. The most important policy implication of the evidence presented in this paper is that if the goal is to grow MSMEs with the potential to contribute to productive employment, policies must be targeted at the most promising firms.

Suggested Citation

  • Xinshen Diao & Josaphat Kweka & Margaret McMillan & Zara Qureshi, 2020. "Economic Transformation in Africa from the Bottom Up: New Evidence from Tanzania," The World Bank Economic Review, World Bank, vol. 34(Supplemen), pages 58-62.
    • Handle: RePEc:oup:wbecrv:v:34:y:2020:i:supplement_1:p:s58-s62.
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    File URL: http://hdl.handle.net/10.1093/wber/lhz035
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    References listed on IDEAS

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    1. Leslie A. Martin & Shanthi Nataraj & Ann E. Harrison, 2017. "In with the Big, Out with the Small: Removing Small-Scale Reservations in India," American Economic Review, American Economic Association, vol. 107(2), pages 354-386, February.
    2. Xinshen Diao & Josaphat Kweka & Margaret McMillan, 2016. "Economic Transformation in Africa from the Bottom Up: Evidence from Tanzania," NBER Working Papers 22889, National Bureau of Economic Research, Inc.
    3. Yue Li & Martín Rama, 2015. "Firm Dynamics, Productivity Growth, and Job Creation in Developing Countries: The Role of Micro- and Small Enterprises," The World Bank Research Observer, World Bank, vol. 30(1), pages 3-38.
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    2. Selejio, Onesmo & Norman, Fatma, 2022. "Does Land Ownership Security Matter in Agricultural Productivity? Evidence from Panel Data in Tanzania," African Journal of Economic Review, African Journal of Economic Review, vol. 10(4), September.

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