IDEAS home Printed from https://ideas.repec.org/a/oup/wbecrv/v34y2020isupplement_1ps58-s62..html
   My bibliography  Save this article

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

Author

Listed:
  • 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.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/wber/lhz035
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. 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.
    2. 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.
    3. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yuki Higuchi & Vu Hoang Nam & Tetsushi Sonobe, 2023. "Do Management Interventions Last? Evidence from Vietnamese SMEs," Working Papers DP-2022-42, Economic Research Institute for ASEAN and East Asia (ERIA).
    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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mcmillan,Margaret S. & Zeufack,Albert G., 2023. "Labor Productivity Growth and Industrialization in Africa," Policy Research Working Paper Series 10294, The World Bank.
    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. Bianchi, Milo & Luomaranta, Henri, 2021. "Agency Costs in Small Firms," TSE Working Papers 21-1252, Toulouse School of Economics (TSE).
    4. Blessing Atwine & Ibrahim Mike Okumu & John Bosco Nnyanzi, 2023. "What drives the dynamics of employment growth in firms? Evidence from East Africa," Journal of Innovation and Entrepreneurship, Springer, vol. 12(1), pages 1-25, December.
    5. Heinrich, Torsten & Yang, Jangho & Dai, Shuanping, 2020. "Growth, development, and structural change at the firm-level: The example of the PR China," MPRA Paper 105011, University Library of Munich, Germany.
    6. Abhijit Banerjee & Emily Breza & Esther Duflo & Cynthia Kinnan, 2019. "Can Microfinance Unlock a Poverty Trap for Some Entrepreneurs?," NBER Working Papers 26346, National Bureau of Economic Research, Inc.
    7. Johannes Boehm & Swati Dhingra & John Morrow, 2022. "The Comparative Advantage of Firms," Journal of Political Economy, University of Chicago Press, vol. 130(12), pages 3025-3100.
    8. Ghani,Syed Ejaz & Grover,Arti & Kerr,Sari & Kerr,William Robert, 2016. "Will market competition trump gender discrimination in India ?," Policy Research Working Paper Series 7814, The World Bank.
    9. Hasan, Rana & Jiang, Yi & Rafols, Radine Michelle, 2021. "Place-based preferential tax policy and industrial development: Evidence from India’s program on industrially backward districts," Journal of Development Economics, Elsevier, vol. 150(C).
    10. Chuantao Cui & Leona Shao-Zhi Li, 2024. "More but not better: Career incentives of local leaders and entrepreneurial entry in China," Working Papers 202417, University of Macau, Faculty of Business Administration.
    11. Ufuk Akcigit & Harun Alp & André Diegmann & Nicolas Serrano-Velarde, 2023. "Committing to Grow: Privatizations and Firm Dynamics in East Germany," International Finance Discussion Papers 1382, Board of Governors of the Federal Reserve System (U.S.).
    12. Baird, Matthew & Chari, A.V. & Nataraj, Shanthi & Rothenberg, Alexander & Telhaj, Shqiponja & Winters, L. Alan, 2019. "The public sector and the misallocation of labor: evidence from a policy experiment in India," LSE Research Online Documents on Economics 102605, London School of Economics and Political Science, LSE Library.
    13. Girum Abebe & Tigabu Degu & Gebrehiwot Ageba, 2018. "What drives productivity change in the manufacturing sector? Evidence from the metalworking industry in Ethiopia," Working Papers 020, Policy Studies Institute.
    14. Geoffrey Barrows & Helene Ollivier, 2016. "Emission intensity and firm dynamics: reallocation, product mix, and technology in India," GRI Working Papers 245, Grantham Research Institute on Climate Change and the Environment.
    15. Diao, Xinshen & Kweka, Josaphat & McMillan, Margaret, 2018. "Small firms, structural change and labor productivity growth in Africa: Evidence from Tanzania," World Development, Elsevier, vol. 105(C), pages 400-415.
    16. Johannes Boehm & Swati Dhingra & John Morrow, 2019. "The Comparative Advantage of Firms," Sciences Po publications 2019-07, Sciences Po.
    17. Nihar Shembavnekar, 2019. "Economic Reforms, Labour Markets and Formal Sector Employment: Evidence from India," Economies, MDPI, vol. 7(2), pages 1-42, April.
    18. Sangeeta Bansal & Massimo Filippini & Suchita Srinivasan, 2023. "How Regulation Might Fail to Reduce Energy Consumption While Still Stimulating Total Factor Productivity Growth," CER-ETH Economics working paper series 23/379, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    19. Benson, Todd & Randriamamonjy, Josee & Fang, Peixun & Nyange, David & Thurlow, James & Diao, Xinshen, 2017. "Prospects for the Sectoral Transformation of the Rural Economy in Tanzania: A Review of the Evidence," Feed the Future Innovation Lab for Food Security Policy Research Papers 270634, Michigan State University, Department of Agricultural, Food, and Resource Economics, Feed the Future Innovation Lab for Food Security (FSP).
    20. Grover,Arti Goswami & Maloney,William F. & O'Connell,Stephen A., 2024. "Which Firms Drive the Gains from Connectivity and Competition ? The Impact of India’s Golden Quadrilateral across the Firm Life Cycle," Policy Research Working Paper Series 10710, The World Bank.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:wbecrv:v:34:y:2020:i:supplement_1:p:s58-s62.. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://edirc.repec.org/data/wrldbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.