Tanzania is one of only a few African countries which have had a long political stability guided by a “national ideology.” The evolution of goals of development policy can be traced back to the period of the independence struggle, especially since the mid-1950s with the establishment of the Tanganyika (later Tanzania) African National Union (TANU), the party of independence. It was not until 1967, however, with the Arusha Declaration, that a clear orientation was explicitly spelled out in terms of a country economic and political ideology: the policy of socialism and self reliance. The period from independence in 1961 to Arusha (1967) has been characterized as a period of shaping a new state and a new ideology while allowing the economy to a large extent to carry on its own pre-independence tracks (Wangwe and Mabele, 1985). The Arusha Declaration articulated TANU's aspirations for a formal development manifesto in a “declaration of intent,” with the main objectives of: a gradual and directed transition to socialism; creating an egalitarian society through the reduction of inequality and universal provision of basic public goods; and building a self-reliant economy in the medium to long term.

Two developments subsequent to Arusha constituted the pillars of the evolving socio-economic setup: the increased and dominant role of the public sector in the economy, and the evolution of an incomes policy meant to enhance egalitarianism.

The public ownership and/or control of the major means of production and distribution (the so-called “commanding heights”) in the economy is an essential feature of socialism.