EXAMINATION OFECONOMIC DIPLOMACY IN PROMOTING INVESTMENTS: THE CASE OF TANZANIA, OMAN AND UNITED ARAB EMIRATES ALI AHMED SALEH A THESIS SUBMITTED IN FULFILLMENT OF THE REQUIREMENTSFOR THE DEGREE OF DOCTOR OF PHILOSOPHY OF THE OPEN UNIVERSITY OF TANZANIA 2015 ii CERTIFICATION The undersigned certifies that he has read and hereby recommends for acceptance by the Open University of Tanzania thesis titled “An Examination of Economic Diplomacy in Promoting Investments: The Case of Tanzania, Oman and United Arab Emirates” in fulfillment of the Requirements for the Degree of Doctor of Philosophy of the Open University of Tanzania. ………………………………….. Prof. Hossea Rwegoshora (Supervisor) …………………………….. Date iii COPYRIGHT No part of thesis may be reproduced, stored in any retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise without prior written permission of the author or the Open University of Tanzania in that behalf. iv DECLARATION I, Ali Ahmed Saleh, do hereby declare to the Senate of The Open University of Tanzania that, this thesis for the Degree of Doctor of Philosophy is my original work and it has not been submitted and will not be submitted to any other University for a similar award. ………………………………………… Signature ………………………………………… Date v DEDICATION The realization of this work after years of hard work was not easy given my personal official responsibilities. First at the Consul General of The United Republic of Tanzania to Dubai and Northern Emirates from 2005-2011 and later as Tanzanian Ambassador to the Sultanate of Oman from 2012 to date.Alot of Dedication and sacrifice have had to be made up to this day. My lifetime professional achievement spanning 30 years in Tanzania Foreign Service and indeed this work is dedicated at first level to "ALLAH SUBHANAWUATAALLAH". For all of this has been realized by HIS will. Secondly to my two dear parents, my late father Shk Ahmed Bin Saleh AlIsmailly and my late mother Jokha Bint Ali Al Jabry for bringing me up. Last but not least to the man and women of my native Pemba Island, Zanzibar and indeed to the entire United Republic of Tanzania for it is only through their sweat and support in different ways as a fellow citizen that I achieved what I have and be what I am. vi ACKNOWLEDGEMENTS The present study is a summation of efforts and experiences of the researcher and other dedicated individuals. My thanks to everyone who supported me during this process. However, a few deserve a mention. First I wish to extend my sincere gratitude to my supervisor Prof. Hossea Rwegoshora for his guidance, perseverance and genuine criticisms to bring this work to its present form. Their efforts, expertise and commitment to academic work have been most helpful. I am grateful to all staff of the open university of Tanzania for their cooperation and support. Last but not least,my deep gratitude also goes to my family members namely, my spouse Sabrina and my children Saleh, Jokha& Rashid for their tireless support, patience and encouragement during the course of my study. Special Thanks to Hon John Samuel Malecela, former Prime Minister and former Chancellor of the Open University of Tanzania (OUT) for his first encouragement to pursue this work. This happened during one of our meetings in Dubai during his many stop-overs when I was Consul General. Secondly I wish to express my deep thanks and gratitude to the immediate past vice chancellor of OUT, Prof Mbwete, who I must say re-ignited my resolve to continue with this work when I had already given up. Finally I am responsible for any shortcoming in this work. any errors that may appear are my sole responsibility. vii ABSTRACT The purpose of this study was to examine why there has been low level of economic cooperation between in Trade and Investment between Tanzania and GCC member states. Specifically the study wanted to study wanted to find out the readiness of the private sector and how favorable were the structural trade mechanism and legal framework in promoting the trade and investment between Tanzanian and Oman and United Arab Emirate. A total of 69 respondents were engaged by the study (i.e. 40.4% female and 59.6% males). These included officials from the government ministries, chambers of commerce, investment promotion agencies, parliamentary committee, business community members among others. The main finding reveals that, there was low level of preparedness of the private sector to promote investment in Tanzania as compared with the strong and buoyant private sector in Oman and United Arab Emirates. It was further revealed that the existing trade structural mechanisms in Tanzania were different with the structural trade mechanism in GCC countries. The GCC countries had relatively better terms and conditions when comparing with that of Tanzania likewise the legal frame work existing in Tanzania and GCC played a different role to promote trade and investment. This was facilitated by different level of development as well as different of interests among different countries. The study recommends that, there is a need to promote an expanding role of the private sector in its broader context and revisit legal and structural trade mechanism in an effort to promote close economic links between Tanzania and the Gulf Cooperation Council countries. viii TABLE OF CONTENTS CERTIFICATION ................................................................................................. ii COPYRIGHT........................................................................................................ iii DECLARATION .................................................................................................. iv DEDICATION ....................................................................................................... v ACKNOWLEDGEMENTS .................................................................................. vi ABSTRACT ......................................................................................................... vii LIST OF TABLES ............................................................................................... xii LIST OF FIGURES ............................................................................................ xiii APPENDIX ......................................................................................................... xiv LIST OF ABBREVIATIONS .............................................................................. xv CHAPTER ONE .................................................................................................... 1 THE PROBLEM AND ITS CONTEXT ............................................................... 1 1.1 Introduction ................................................................................................. 1 1.2 Background to the Problem .......................................................................... 1 1.3 Statement of the Problem ............................................................................ 10 1.3.1 The General Objectives .............................................................................. 11 1.3.1.1 Specific Objectives ..................................................................................... 12 1.3.1.2 Research Questions .................................................................................... 12 1.4 Significance of the Study ............................................................................ 12 1.6 The Organization of the Study .................................................................... 14 CHAPTER TWO ................................................................................................. 16 LITERATURE REVIEW .................................................................................... 16 2.1 Introduction ................................................................................................ 16 ix 2.5 Diplomacy and Globalization ..................................................................... 31 2.5.1 Commercial Diplomacy .............................................................................. 33 2.5.2 Trade Diplomacy ........................................................................................ 35 2.5.3 Finance Diplomacy ..................................................................................... 40 2.6 Theoretical Discussions .............................................................................. 41 2.6.1 Theory of Economic Nationalism ............................................................... 42 2.6.2 Theory of Economic Internationalism ......................................................... 42 2.6.3 Theory of Economic Structuralism ............................................................. 43 2.6.4 Dependency by Theory ............................................................................... 43 2.6.5 World System Theory ................................................................................. 44 2.6.6 Regional Integration Schemes .................................................................... 44 2.6.7 The South-South Cooperation ..................................................................... 45 2.7 New Actors and New Issues in Inter-State Relations ................................... 47 2.8 Empirical Review ....................................................................................... 50 2.8.1 Experiences from other Countries ............................................................... 52 2.9 Synthesis and Knowledge Gaps .................................................................. 56 CHAPTER THREE ............................................................................................. 57 RESEARCH METHODS AND PROCEDURES ............................................... 57 3.1 Introduction ................................................................................................ 57 3.2 Study Area ................................................................................................. 57 3.3.1 Qualitative Approach .................................................................................. 60 3.3.2 Quantitative Approach ................................................................................ 61 3.4 Research Design ......................................................................................... 61 3.5 Target Population ....................................................................................... 62 x 3.5.1 Sampling Procedures .................................................................................. 63 3.6 Methods of Data Collection ........................................................................ 67 3.6.1 Documentary Review ................................................................................. 67 3.6.2 Interviews ................................................................................................... 68 3.6.3 Questionnaire ................................................................................................ 69 3.7 Data Analysis ............................................................................................. 69 3.8 Validity and Reliability of Data .................................................................. 70 3.9 Ethical issues .............................................................................................. 71 3.9.1 Access and Acceptance............................................................................... 71 3.9.2 Informed Consent ....................................................................................... 72 3.10 Limitation of the Study ............................................................................... 72 CHAPTER FOUR................................................................................................ 74 FINDINGS AND DISCUSSIONS........................................................................ 74 4.1 Introduction ................................................................................................ 74 4.2 Readiness of the Private sector in Promoting International Trade and Investment .................................................................................................. 74 4.2.1 The Private Sector in Tanzania ................................................................... 75 4.2.1.1 Readiness of the Private Sector in Tanzania ................................................ 76 4.2.1.2 Factors affecting Readiness of the Private Sector to in Tanzania ................. 83 4.2.2 Readiness of private sector in Oman and United Arab Emirate ................... 88 4.3 An Over View of Structural Trade Mechanism Tanzania ............................ 93 4.3.1 International Trade Mechanism in Tanzania ............................................... 95 4.4 Legal Framework in Promoting the Cooperation between Tanzania and GCC Countries ...................................................................................................102