Investing in politics

The role of business people in politics is a big issue here in Tanzania as it is in many countries. Many people view the issue cynically: business people go into politics solely to use the political process to increase their profits. While this is part of the reason, I also believe there exists a more charitable explanation. Like many developing countries, Tanzania’s regulatory institutions are weak. As a result, business people often need powerful political allies to protect their investments. Business people may thus see going into politics as an investment when regulatory institutions are weak. While collective action to produce a better regulatory climate may be the socially optimal outcome, collective action problems make individual political action – investing in politicians or becoming one – the rational strategy.