Abstract
Considerable natural gas deposits have recently been discovered in Tanzania. After providing information on these discoveries in terms of magnitude, potential value and their role within Tanzania’s economic reality, the author reviews the literature on the relationship between resource abundance and underdevelopment. He introduces a game theory model that helps to visualise the set of incentives facing ruling elites in resource-abundant, institutionally weak states. Against this background, the strength of Tanzania’s governance institutions—including those specific to the oil and gas sector—is assessed. The authors concludes by suggesting practical policy steps to strengthen Tanzania’s institutions, as these must be designed in a way that guarantees that neither citizens nor the government prefer violence over taxation and work respectively to access profits generated in the resource sector.
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Notes
- 1.
Personal interview with a marine ecologist and consultant, Dar es Salaam, 12 April 2016.
- 2.
Tanzania is a relatively peaceful country, and so the risk of instability is perhaps overplayed in the stylised model. Nonetheless, oil rents have had pernicious effects on stability in other countries. Hence, the model serves as a means of understanding the risks of future instability in Tanzania.
- 3.
Tanzania’s tax base is very narrow, making the government’s options in this respect quite limited.
- 4.
This ratio was calculated using tax revenues derived from comparisons of aggregate national tax revenues and projections of oil or natural gas revenues, with the latter being based on estimated reserves, projected exports and estimated future oil and gas prices.
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The author is grateful to Sören Scholvin for comments on a draft version of this chapter.
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Harvey, R. (2019). Will Tanzania’s Natural Gas Endowment Generate Sustainable Development?. In: Scholvin, S., Black, A., Revilla Diez, J., Turok, I. (eds) Value Chains in Sub-Saharan Africa. Advances in African Economic, Social and Political Development. Springer, Cham. https://doi.org/10.1007/978-3-030-06206-4_10
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