Institutional Innovations and Competitiveness of Smallholders in Tanzania

This research examines the potentials for various forms of institutional innovations in building competitiveness of smallholder agriculture in Tanzania. It is inspired by a review of stylized facts on the performance of the agricultural sector since 1961 in Tanzania, from which it is hypothesized that persistent structural and institutional constraints inhibit increases in productivity, quality, and output of smallholders. Agriculture continues to employ a significant proportion of the labour force, and the smallholders dominate production of both food and export crops. While some policies and interventions of post independence contributed to the poor performance in export crop production, structural adjustments and trade liberalization did not reverse performance as envisaged. Recognizing the weakness in the workings of market institutions based on the neoclassical abstraction of free markets, this research draws from institutionalist perspectives which invoke the embeddedness of markets in social structures in the analysis of competitiveness of smallholders’ export crop production. The core argument is that proactive and collective actions among market institutions and non-market institutions are crucial for addressing market failures and other policy and institutional rigidities that impede on competitiveness of smallholders. This research examines this question using an interdisciplinary approach through an in-depth inquiry of three case studies involving smallholder production of cash crops.

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