Small Enterprise Growth and the Rural Investment Climate: Evidence from Tanzania

Tidiane Kinda and Josef Loening

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Abstract: This paper analyzes characteristics of nonfarm enterprises, their employment growth patterns, and constraints in doing business in rural Tanzania. Using unique survey data, we describe a low-return sector struggling to compete in a challenging business environment. However, about one-third of rural enterprises are growing fast. Most enterprises engage in agricultural trade. Due to a rapidly growing agricultural sector in recent years, limiting demand-side constraints, rural enterprise constraints in Tanzania mainly operate from the supply-side, suggesting that in particular access to finance, road infrastructure and rural cell phone communication is associated with employment growth. A major finding is that subjective and objective measurements of business constraints are broadly comparable. We discuss a number of factors that would help to unleash the full potential of private sector-led growth in rural areas. Marginal improvements of the rural investment climate matter for growth.

Date: 2010
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Published in African Development Review, 2010, 22 (1), pp.173-207. ⟨10.1111/j.1467-8268.2009.00232.x⟩

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Journal Article: Small Enterprise Growth and the Rural Investment Climate: Evidence from Tanzania (2010)
Working Paper: Small Enterprise Growth and the Rural Investment Climate: Evidence from Tanzania (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00465861

DOI: 10.1111/j.1467-8268.2009.00232.x

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