Abstract
The story begins by telling about how the soft budget constraint first emerged within the parastatal sector in Tanzania. It takes off in the late 1960s, when the newly independent East African nation took its first major steps on the road to socialism. Comprehensive ideological, institutional and organisational change initiated a process of gradual creation of a new economic and political system. These developments had tremendous consequences for the parastatal sector, which gained a central position within the system, and for the actors within it. As the system evolved, problems arose that parastatal managers and their counterparts in the state and party bureaucracy had to handle within the new and changing environment. By studying the establishment of the socialist system and the consequences for the parastatal sector during the late 1960s and the 1970s, this chapter examines how the soft budget constraint arose in the process. It characterises the institutional structure and other contextual circumstances under which the actors operated, the problems they faced, the opportunities and constraints for dealing with those and the behavioural outcomes of the incentives thus created. Let us first consider the historical, cultural and ideological setting in which these developments occurred.
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References
Hanak (1985), pp. 7-9, and Havnevik (1993), pp. 31-33.
See Mukandala (1988), pp. 10-11 and 421.
Ibid., pp. 11-12.
Kimei (1987), p. 44.
Ibid., pp. 57-68.
See Tables 3.9 and 3.10 below. Mukandala (1988), p. 12.
Kiondo (1989), p. 42.
Mukandala (1988), pp. 12-15.
Ibid., p. 18.
Havnevik (1993), p. 37.
Ibid., pp. 37-38.
Ibid., pp. 38-41.
Ibid., p. 39.
Ibid., pp. 37-39.
Kiondo (1989), p. 10.
See Mukandala (1988), pp. 15-22.
Skarstein and Wangwe (1986), p. 17.
Nyerere (19686), pp. 14-16.
As pointed out, for instance, by Kiondo (1989), p. 12.
Hedlund and Lundahl (1989), p. 13.
Nyerere (1968b), pp. 17-18.
Ibid., pp. 35-36. Leaders are all high or middle level state officials and appointed or elected party members.
Hedlund and Lundahl (1989), p. 18. See also Hanak (1985), p. 11.
Nyerere (19686), pp. 18-21.
Ibid., p. 34. These ideas are further developed in a TANU pamphlet written by Nyerere (1968d), first published in 1962.
See Hydén (1980), pp. 98-99.
Nyerere (1968d), pp. 3-4.
Ibid. and Nyerere (1968a), pp. 108-118.
Hydén (1980), p. 99.
Hedlund and Lundahl (1989), p. 7.
Kiondo (1989), pp. 50-51.
Havnevik (1993), pp. 42-43.
Hanak (1985), pp. 36-37 and 54.
Hydén (1980), pp. 13-16, and (1985), pp. 21-23.
Hydén (1980), p. 18, and (1985), pp. 24-25.
Cf. the discussion on ujamaa and ujima above. See Hydén (1985), pp. 29-36, for additional examples of the functions provided by the economy of affection.
Platteau (1991), p. 56.
Ibid., p. 16.
Cf. Gurevitj (1970), p. 77 ff, on the ‘gift-institute’ of pre-and early feudal Teutonic Europe.
Hydén (1980), p. 19.
as Hydén (1985), pp. 39 and 41.
Hydén (1980), pp. 26-28.
Hanak (1985), p. 54.
Hydén (1980), p. 97.
Cf. Ndulu (1984), p. 19.
Nyerere (1968b), p. 16.
Kiondo (1989), p. 63, and Ndulu (1984), p. 22. ° World Bank (1988a), p. 4.
The phrase was first used by Nyerere, but Hydén articulated it as a strategy. (Hanak, 1985, p. 22, footnote 2.) n Hydén (1979), p. 5.
Sa Ibid., p. 6.
The essence of the programme was formulated by Nyerere (1968a).
Hedlund and Lundahl (1989), p. 35.
Hydén (1980), p. 104.
See Amani et al. (1987), p. 16, and Hedlund and Lundahl (1989), p. 38.
Hydén (1980), p. 119.
Moshi (1990), p. 14, and Mukandala (1988), pp. 407-408.
Hydén (1980), p. 157.
Associate companies were those in which the state only held minority shares and which the National Development Corporation had no formal responsibility to manage. (Mukandala, 1988, pp. 317, 319-320 and 330.)
Hydén (1980), pp. 156-157.
Mukandala (1988), p. 318.
Ibid., p. 115.
Ibid., pp. 23-26. Ibid., pp. 27-28. See, for instance, Hanak (1985), p. 68, and Mihyo (1994), pp. 44 - 45.
Kiondo (1989), pp. 43-44.
See Hanak (1985), pp. 59 and 67-70 (quotation from p. 70), and Mukandala (1988), pp. 107-109.
Cf. Mukandala (1995), p. 55.
Winiecki (1990), p. 198. Under socialism in the Soviet Union, nomenklatura referred to the body of regulations of the party for the filling of its various positions. (Kornai, 1992, p. 37.) Similar formal party rules were established in Tanzania, applying, for instance, to the appointment of senior positions in the party-controlled workers’ union. (Masanja, 1990, p. 216.)
See Mukandala (1988), pp. 103-107, and Sayore (1989), pp. 5-6.
Mukandala (1988), pp. 107 (quotation) and 116. See also Sayore (1989), pp. 15-16.
Mukandala (1988), pp. 107 and 1 l 1, and World Bank (1988a), p. 28.
Mukandala (1988), p. 28. Mukandala (1995), p. 57.
Hanak (1985), p. 70.
Mukandala (1988), p. 408.
Ibid., p. 30.
Hydén (1980), pp. 157-159 (quotation from p. 159).
Mukandala (1988), p. 120, in turn quoting a parastatal manager.
See Kiondo (1989), pp. 69-70, and Mukandala (1988), pp. 29-36, 115 and 118-121, for a survey of the measures adopted for parastatal control.
See Kiondo (1989), pp. 70-71, and Mukandala (1988), pp. 31, 313, 315-316 and 326-327.
Mukandala (1988), pp. 29-30. See also Kiondo (1989), p. 69.
structure with clear hierarchical relationships soon resembled what Mukandala refers to as a Byzantine spaghetti maze.88
See Mukandala (1988), pp. 32, 233-234, 321 and 328-337 (quotation from p. 333).
Ibid., p. 32.
bid., p. 409.
Moshi (1990), p. 3, Mukandala (1983), pp. 2 and 15, and (1988), pp. 125-126.
Mukandala (1995), p. 57.
As argued, for instance, by Hydén (1980), p. 169. Ibid., pp. 169 and 160-167.
Bishagazi (1993), p. 9 (first quotation), and Moshi (1980), p. 7 (second quotation).
Moshi (1980), p. 7.
Hydén (1980), p. 167.
Ibid., p. 161.
Ibid., p. 163.
Ibid., p. 165. See also Moshi (1990), p. 5. 0o Mukandala (1988), p. 409.
Kimei (1987), p. 163.
on the National Road Haulage Company (NRHC) draw on Mwaze (1983), pp. 43-44 and 50-54; those on the National Housing Corporation (NHC) are based on Mukandala (1988), pp. 186, 201-204, 210, 212 and 214239; and the parts on the District Development Corporations (DDCs) are fetched from Moshi (1980), pp. 1220.
Mukandala (1988), p. 236.
Subramanin (1977), p. 2, quoted by Mwaze (1983), p. 52.
I’s Regions and districts and their centrally appointed top officials, the development directors, were part of the decentralised state administration that effectively replaced the previous, fairly autonomous, local governments with powers to tax, headed by elected politicians. On decentralisation within the growing public sectors in Tanzania and other African economies in the late 1960s and 1970s, see for instance 1-Iydén (1985), pp. 118150.
Mukandala (1988), p. 217.
I11 112 Makoba (1993), pp. 42 and 46.
Ibid., p. 42.
Lipumba (1995), pp. 26-27.
Sayore (1989), p. 19.
Ibid.
Cf. the definition of parastatal enterprises in Chapter II.
Cf. Ndulu (1984), p. 29.
Katunzi (1984), p. 148.
Moshi (1980), p. 14.
Table A.10 in the appendix.
As reported, for instance, by Hydén (1979), pp. 8-9.
The Tanzania Association of Parastatal Organisations (1989), p. 36, reports that civil servants in the parent ministries were unable to interpret financial reports - as were parastatal managers.
Makoba (1993), pp. 45-47.
Mihyo (1994), p. 3; emphasis added.
The crucial and far-reaching role that parastatals were expected to play in directing societal developments in the planned and desired manner is discussed by Ndulu (1984), pp. 18-23.
Mihyo (1994), p. 3.
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Skoog, G.E. (2000). Emergence during the Establishment of Socialism. In: The Soft Budget Constraint — The Emergence, Persistence and Logic of an Institution. Springer, Boston, MA. https://doi.org/10.1007/978-1-4757-6793-3_3
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