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Journal Articles African Development Review Year : 2010

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

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.

Dates and versions

hal-00465861 , version 1 (22-03-2010)

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Tidiane Kinda, Josef L. Loening. Small Enterprise Growth and the Rural Investment Climate: Evidence from Tanzania. African Development Review, 2010, 22 (1), pp.173-207. ⟨10.1111/j.1467-8268.2009.00232.x⟩. ⟨hal-00465861⟩
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