MARKET AND STATE - EVALUATING TANZANIAS PROGRAM OF STATE-LED INDUSTRIALIZATION

As market-oriented development strategies have become more popular in recent years, state-led development programs have been criticized for not producing efficient outcomes. Efficiency, however, was not the major motivation for state intervention in economies. Focusing on theories of public versus private production, I argue that broad-scale state interventions may be a rational choice for some developing states, I examine the origins and consequences of Tanzania's state-led program in terms of these theories. Comparing Tanzania to Kenya (a market-oriented case)I show that the state-led program was successful at strengthening the capital market and producing a faster rate of capital formation.