The Business Environment and Productivity in Tanzania

Using the World Bank’s Enterprise Surveys (ES) data, this paper sheds light on the relationship between total factor productivity (TFP) and the business environment in Tanzania. It finds statistically significant evidence that cumbersome tax administration, limited access to finance, and limited access to transport are associated with lower firm TFP in the manufacturing sector. While regression coefficients are not statistically significant, indicators of regulatory burden and power outage are also negativelly associated with TFP. These results underscore the importance of improving efficiency of tax administration, easing the regulatory burden, and improving access to finance and reliable infrastructure.