From Farmer to Dalali: Rethinking Structural Transformation Pathway in Tanzania

The shifting of workers from agriculture to other more productive sectors is defined in academic circles as structural transformation. Tanzania’s experience with structural transformation looks different. Instead of manufacturing, labour in Tanzania appears to move from agriculture to the services sector. This structural shift also differs from the development experience in other regions like the United States, Europe, and East Asia. Such a pattern drives us to rethink whether and how the development service sectors can function as an alternative path to achieve sustainable economic growth in Tanzania without a robust manufacturing sector. This research thesis adopts a mixed method between quantitative and qualitative approaches to understand the role of manufacturing, service and servicification activities in determining the pattern of structural transformation in Tanzania from 1961 to 2021. Two disciplinary approaches are combined. First, the historical description is adopted to...Show moreThe shifting of workers from agriculture to other more productive sectors is defined in academic circles as structural transformation. Tanzania’s experience with structural transformation looks different. Instead of manufacturing, labour in Tanzania appears to move from agriculture to the services sector. This structural shift also differs from the development experience in other regions like the United States, Europe, and East Asia. Such a pattern drives us to rethink whether and how the development service sectors can function as an alternative path to achieve sustainable economic growth in Tanzania without a robust manufacturing sector. This research thesis adopts a mixed method between quantitative and qualitative approaches to understand the role of manufacturing, service and servicification activities in determining the pattern of structural transformation in Tanzania from 1961 to 2021. Two disciplinary approaches are combined. First, the historical description is adopted to present Tanzania’s economic development trajectory. Secondly, in this trajectory, methods and materials are adapted from economics, to show with macroeconomic data how the country’s national economy has evolved over time. Focus is placed on policies that were implemented as well as the turning points where shifts become obvious in national economic processes. This thesis found that the service sector could enhance Tanzania’s economic growth and development if linked to industrial activities, specifically manufacturing. In general, the structural transformation from agriculture to the industrial sector in Tanzania still generated the highest growth and gains in worker productivity, except after the Arusha Declaration between 1967 and 1985. It is difficult for late industrialised countries, such as Tanzania, which lacks a strong manufacturing core, to pursue industrialisation and compete with what East Asian countries have achieved. However, the servicification of manufacturing provides an opportunity to bypass the manufacturing stage and keep up with the recent trend of global industrialisation.Show less

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From Farmer to Dalali: Rethinking Structural Transformation Pathway in Tanzania