Poverty and Human Development Report 2009 - UNDP in Tanzania

Chapter
Introduction
3
THE ROLE OF THE STATE IN A
DEVELOPING MARKET ECONOMY
The next phase of the National Strategy for Growth and Reduction of Poverty (MKUKUTA II),
commencing in 2010, will continue to focus on socio-economic growth and transformation
towards Tanzania’s Development Vision 2025. Crucially, implementation will require a shared
understanding and appreciation of the nation’s long-term direction, as well as a clear recognition
of the division of responsibilities among key development actors.
Since the mid-1980s, the Government of Tanzania has re-oriented its central developmental
responsibilities as: (i) providing policy and strategic direction for the country; (ii) creating an
enabling environment for the private sector to operate; and (iii) establishing and strengthening the
institutional framework for growth and accompanying regulatory and enforcement systems. As the
country moves into the next phase of MKUKUTA it is important to reflect on national achievements
and challenges over the last three decades and the path forward in light of current local realities,
international experiences and perspectives, and new thinking in response to the global economic
crisis. A deeper understanding of the role of the Tanzanian State within market-dominated economic
management is essential to inform and guide the development of the country’s strategic direction
and implementation of programmes to realise the goals of Vision 2025.
Discussions on the role of developmental states are ongoing worldwide, reflecting the evolutionary
nature of this role, as well as ideological perspectives. In Tanzania, discussions are taking place
in Parliament, the media and the intellectual community in general. The global economic crisis
has introduced new challenges and opportunities which have influenced national debate.
This chapter examines the role and principal functions of the State in economic management
and broader socio-economic transformation.
State Involvement in Economic Management
All states have a role to play in managing their economies, but the nature and extent of this
involvement is context-specific; there is no fixed role for the state that fits every economy. The
responsibilities of a state in a country’s economic management stem from ideological principles
arising from political inclinations. Each nation’s distinct ideology determines the mix of market
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