Every country has its second, underground, unofficial, irregular or parallel economy. By their nature they are hidden and defy accurate and formal measurement. They provoke conceptual and definitional arguments among analysts. There has recently been a surge of interest; anecdote, newspaper reports and ‘educated guesses’ have increasingly been replaced by serious analysis. However, most of the new generation of studies are of developed economies.

This book examines the effect on a developing economy. It explores the causes, identifies the key sectoral manifestations and reveals the various groups of actors. It attempts to establish the size of the second economy of Tanzania.

Various factors drove the official economy into distress. Tanzanian peasants, wage earners and firms resorted to legitimate and illegitimate activities to overcome state control and shortage of basic necessities.

This pioneering study will be invaluable for policy makers, international funding bodies and for students who are faced with trying to understand the realities of life behind the formal facade of economic theory and official statistics.

T.L. Maliyamkono is one of the authors of The Challenge for Tanzania's Economy (1986) and is Professor of the Economics of Education and Director of the Eastern and Southern African Universities Research Project (ESAURP) in the University of Dar es Salaam.

M.S.D. Bagachwa is a Senior Research Fellow at the Economic Research Bureau in the University of Dar es Salaam. He was previously on the National Price Commission in Tanzania and was a Research Officer at Queen Elizabeth House in the University of Oxford.