Employment and productivity growth in Tanzania’s service sector

Ellis, Mia; McMillan, Margaret S.; and Silver, Jed. 2018. Employment and productivity growth in Tanzania’s service sector. In Industries without smokestacks: Industrialization in Africa reconsidered, eds. Richard Newfarmer, John Page, and Finn Tarp. Chapter 15, Pp. 296-315. Oxford, UK: Oxford University Press. https://doi.org/10.1093/oso/9780198821885.003.0015

During 2002–12, Tanzania’s economy grew more rapidly than at any other time in its history. More than three-quarters of its labour productivity growth is accounted for by structural change; the remainder is largely attributable to within-sector productivity growth in agriculture. The growth attributable to structural change is almost entirely explained by a rapid decline in the agricultural employment share and an increase in the non-agricultural private sector employment share—with 11.4% of employment growth in the private non-agricultural economy due to the expansion of the formal private sector; the remaining 88.6% occurred in the informal sector. This chapter assesses the role that services have played in Tanzania’s recent growth and the role that they could play in its economic future.