Why Institutions Matter for Industrialization-led Development - 22nd Annual Research Workshop
Tanzania’s leading think thank REPOA in cooperation with the European Union Delegation to Tanzania and the EAC, organises a workshop around the topic on how institutions enhance or constrain socio-economic transformation, particularly a transformation which puts industrialization at the centre of its development path? The workshop will be held in Dar es Salaam features international and national high-level researchers, policy makers, development partners, CSOs and media to promote the research on how institutions may ease the industrialization development in Tanzania.
The workshop aims at enhancing the under-standing of the role of institutions (and individuals) in shaping the character of growth and socio-economic transformation, both in theory and practice in Tanzania. Furthermore, the workshop will bring together researchers and members of governmental bodies, as well as civil society representatives, to further promote research and deepen policy dialogue on the institutional needs for the Second Five-Year Development plan and Development Vision 2025.
The keynote speaker in this event will be Prof. Lant Pritchett from John F. Kennedy School of Government – Harvard University who will give a talk on “The Difficult Growth Dynamics of a Deals World”.
Why is Tanzania yet to achieve inclusive economic growth and development commensurate with low poverty and high human development levels?
Tanzania has recorded sustained economic growth over the last 15 years with the GDP annual growth rate averaging 6.7% from 2002 to 2016. This growth has not yet translated into significant poverty reduction, job creation and productivity gains in the economy remain unsatisfactory.
Tanzania’s Development Vision 2025 (TDV 2025) aims to achieve middle-income status through diversifying and semi-industrialising the Tanzanian economy. Thereby, the contribution of the industrial sector to GDP will increase from 24.4% in 2010 to 31% by 2025, and the share of manufacturing will almost double from 9.3% to 18%.
However, there is still a lack of understanding on how the desired institutional change in Tanzania can be achieved. The workshops aims to close this knowledge gap with linking research and dialogue institutions that share experiences of other countries, comparing and contrasting how various institutions are responsible for socio-economic transformation.
One of the key issues of Repoa’s 22nd Annual Research Workshop is that institutions are responsible for shaping the type and form of growth and development. Institutions matter because they shape incentives governing key economic actors in societies in a manner that affects investments in physical and human capital and technology, and the organization of production. The importance of institutions cannot be overemphasized as they not only determine economic growth and development but also various economic outcomes including, but not limited to, how resources are distributed in the society.
Institutions may be categorized as hard, for example, the parliament, judiciary, government ministries, departments and agencies, or soft, for example, taxes, laws and policies. They can also be viewed as informal, for example, norms, attitudes, beliefs, habits, or social, for example, inclusion/representation of different groups in society such as gender, class, religion etc.
Contemporary developments in institutionalist theory underpin the significance of initial conditions and path dependency in the process of economic evolution, and demonstrate why public actions and intermediary institutions are necessary for effective transformation in the context of real market conditions characterized by uncertainty, transaction costs and externalities.
Given that institutions matter in promoting economic development and noting the limited progress in Tanzania’s industrialization to date, it may be deduced that different forms and quality of institutions may need to be in place for the country’s industrialization agenda to be achieved.
Some of the key questions we will explore during Repoa’s 22nd Annual Research workshops will focus on which types of institutions Tanzania needs to achieve the envisioned socio-economic development, which roles government and civil society actors can play in the development of efficient institutions, and how globalization, regional economic partnership agreements, and international trade policies promote or constrain the competitiveness of the Tanzanian economy.