The Political Economy of Tanzania by Lofchie Michael F.;

Author:Lofchie, Michael F.;
Language: eng
Format: epub
Publisher: University of Pennsylvania Press
Published: 2014-08-15T00:00:00+00:00

Chapter 5

The Path to Economic Reform II: Internal Alignments

There are two critical weaknesses in the aid debate. The first is its reliance on an oversimplified, two-actor model, the tendency to view the reform dialogue as one between unitary agents on each side. The Tanzanian reality was far more complex. During the long period of delay between the 1974 economic low point and the initiation of a reform effort in the mid-1980s, both the donors and Tanzanian leaders showed internal divisions in their approach to the country’s economic policies. The second weakness is that both sides exaggerate the impact of donor influence: one side holds the donors almost exclusively responsible for a continuity of poor policy, the other for an assertive intrusiveness that provides an explanation for policy change. Each is an overstatement.

Tanzania’s donors could not have begun to bring about significant changes unless the country’s internal political alignments had undergone a corresponding shift in favor of policy reforms. This was not a smooth or speedy process. It would be naïve to believe that an economic crisis produces a collective change of heart on the part of a country’s top leaders, who now come to understand that their crisis calls for fundamental policy changes. The relationship between an economic crisis and a government’s decision to move forward with a program of economic reform is not a simple matter of cause and effect whereby political elites recognize their policy mistakes and adjust their policies accordingly. If that were so, Tanzania would not have experienced such a prolonged interlude between the low point of its economic crisis and the beginning of policy changes: it would have initiated reform efforts years earlier.

The ensemble of causal factors that launches a policy change is a cryptic mix of external and internal elements and of intellectual and material considerations. The immediate causal connection between an economic crisis and the start of reforms is weak: an economic crisis strengthens the arguing position of those who favor alternative policies and weakens the policy arguments of those who wish to preserve the existing framework. However, the strength of policy arguments is only one factor in providing a convincing explanation of exactly when a reform effort begins. The societal dynamic by which an economic crisis brings about reforms is less obvious and more gradual: a crisis gradually strips away the social basis of support for those who wish to continue the existing policy arrangements.

Any policy framework creates economic winners and losers. It seems axiomatic that social groups that are doing well, even if an economy as a whole is in decline, will be more reluctant to accept economic reform than those that are doing poorly. As an economic crisis deepens, it inverts the ratio of winners to losers: the winners decline; the losers increase. As yesterday’s winners become today’s losers, their social support for the system will decline correspondingly. As it grows in size, the coalition of economic losers is able to exert growing pressure on the government to change its policies.

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