ABSTRACT
This chapter discusses the economic history of Tanzania since its independence in 1961. It analyses the institutional setting of the country using a transaction cost approach. The chapter considers some of the general implications for transaction costs and small scale industry development in Tanzania. Tanzania’s colonial legacy has been reflected in the development of the country’s political and economical agenda since independence in 1961. In essence, the economic programmes in Tanzania have involved both policy changes and reform measures, and a certain degree of change in the economic environment does, in fact, seem to have taken place. The impact of institutions on transactions costs in general in the economy of Tanzania is addressed, but of particular interest to the analysis are those institutions that affect the economic environment of small scale firms. Ideology in socialist Tanzania produced a set of objectives centred around economic development, putting emphasis on distribution and economic equality, rather than on economic growth.
