Industrial Policy in the traditional sense was reactive, bureaucratic and demand side based. By contrast, modern industrial policy requires pro-active intervention and changes. Consequently, it should address competitiveness, and policy interventions should also focus on the supply side. Modern industrial policy should highlight three core areas:

1) The operating/enabling environment;

2) Government's capacity to co-ordinate and facilitate the policy development process and its implementation;

3) Sectoral/Micro competitiveness.

Tanzania's Sustainable Industrial Development Policy (SIDP) addresses these core areas. The main thrusts of the SIDP are to ensure a suitable enabling environment, facilitate private sector development inter alia through the privatisation of state assets, deepening and widening of industrial capacity, and developing specific sector capabilities. Some four years after its adoption as a national industrial policy, the SIDP has not yet had a major impact on Tanzania's industrialisation. One of the objectives of this study is to analyse constraints on the full implementation of the SIDP, within the framework of achieving sustainable and competitive development.