Small Scale Industries, Transactions Costs and Reform: The Case of Tanzania
AbstractThere has been a revival of interest in small scale industries and their linkages with a nation's institutional arrangements, among both academicians and policy makers. Extending the definition of institutions to include formal and informal rules, this paper attempts to identify these lingages using the technique of transaction costs. Applying this to the economic environment of small firms in Tanzania, a country presently undergoing transition from a socialist to a market oriented economic system, it is found that transaction costs have been high among Tanzania's small firms owing to certain institutional factors which have shaped the country's developmental history. Among the most important identified are tha official ideology alien to small scale production, direct intervintion of the government and weak linkages between parastatals and small firms. It is argued that institutional rigidities constitute a main source of high transaction costs during the period of transition, as well as a challenge for the development of a dynamic small scale industrial sector in the future.
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Bibliographic InfoPaper provided by Stockholm School of Economics in its series Working Paper Series in Economics and Finance with number 124.
Length: 47 pages
Date of creation: Sep 1996
Date of revision:
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More information through EDIRC
Small industries; institutions; transaction costs; transition; Tanzania;
Find related papers by JEL classification:
- D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
- E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
- L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
- O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General
- O55 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Africa
- P20 - Economic Systems - - Socialist Systems and Transition Economies - - - General
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- Eggertsson,Thrainn, 1990. "Economic Behavior and Institutions," Cambridge Books, Cambridge University Press, number 9780521348911, November.
- Nooteboom, B., 1993. "Firm size effects on transaction costs," Open Access publications from Tilburg University urn:nbn:nl:ui:12-376115, Tilburg University.
- Levy, Brian, 1993. "Obstacles to Developing Indigenous Small and Medium Enterprises: An Empirical Assessment," World Bank Economic Review, World Bank Group, vol. 7(1), pages 65-83, January.
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