March 24, 2005
last post from the coast
Posted by Allison Christians

It's the beginnings of the rainy season here in Tanzania.  Coming in torrential downpours that flood the streets causing mass traffic problems, the rain creates a systemic breakdown that makes going about daily business even more difficult than usual.  It is like so many other extremes here, extremes of weather, of course but also of poverty and wealth, of globalism and insularity, of system and practice.  Tanzania's entry into the global market, its efforts to attract foreign investment, its ability to build a supply niche in competition with its neighbors--these are illustrated by the microcosm of the local market: at this moment in time there are too many sellers and not enough buyers.  People flood the cities looking for work, competing for a very small number of jobs.  Taxi drivers wait for fares, shopkeepers wait for customers, resort hotels wait for tourists, empty buildings wait for industry.  The country waits for investment. 

But what Tanzania has to offer by way of investment incentives are in great supply in the world market, so it's a formidable task to attract capital against the efforts of competing countries, developing and developed.  Free zones and tax breaks have become a baseline requirement for attracting multinationals, but the loss of revenue from global profit centers creates huge challenges for developing countries still struggling to build the basic foundations of society--schools and roads, legal regimes and institutions.  Taxation and tax competition are only a part of the overall story of globalization and development, but I think they are an important, and perhaps underestimated, component. 

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