This report is the successor to theCountry Economic Memorandum for Tanzania prepared in 1996(World Bank 1996). The 1996 memorandum focused on thechallenge of reforms and paid particular attention to theimpact of reforms on growth, incomes, and welfare inTanzania. The present report draws out lessons fromTanzania's development experience of the past fourdecades, with emphasis on the period since the last report,and assesses the imperatives for higher sustained growth andbetter livelihood for its citizens in the future. Thebackground papers presented in this Country Study review andassess Tanzania's actual growth and poverty reductionperformance against its large natural potential and againstcountries at a comparable stage of development, analyze themain reasons behind the performance record, and then drawout the strategic and institutional imperatives forexploiting the country's vast potential for sustainedgrowth and reduction of poverty in the long and medium term.The analysis focuses on development of the private sectorand its increased role in scaling up overall growth andmodernization of the Tanzanian economy. One chapter focuseson the Zanzibar economy and its development, even thoughZanzibar is part of the union, because the policy andinstitutional framework for the island are distinct enoughto merit separate attention. Also presented are thestatistical appendices.