Exporting, Ownership and Confidence in Tanzanian Enterprises

Abstract

HERE has been some concern regarding the effect of economic liberalisation and adjustment on the performance of African manufacturing. The underlying concern is that the manufacturing base is weak and uncompetitive. Partly, this is attributed to inefficiencies due to protection. If this were the sole problem, liberalisation would involve adjustment costs as the most inefficient enterprises were closed or re-structured, but the removal of protectionist distortions would facilitate greater efficiency in the long-run. World Bank (1994) argued that the performance of manufacturing has tended to be best in those African countries undertaking adjustment. Bennell (1998) questions this claim, arguing that manufacturing in Africa has tended to perform poorly irrespective of the presence of adjustment. The concern here is that the problem is more deep-rooted than protection: for example, technical efficiency is low, the labour force is not adequately educated or trained, and entrepreneurial skills are lacking. Consequently, manufacturing would be unable to respond to the incentives of a more open environment, and would crumble in the face of increased competition from imports. We address this broad concern using information from a survey of Tanzanian manufacturing enterprises. Although we are unable to address firm-level efficiency per se, we are able to identify the characteristics of exporting firms (in particular regarding ownership and investment) and their expectations regarding economic policy and how it will affect them in a period of