During his term Mkapa continued the liberalization of the economy that began under his predecessor Ali Hassan Mwinyi. He privatized most of the state owned corporations and pursued free market policies designed to attract foreign investment.

Critics of Mkapa's policies felt that he went too far in allowing foreign companies control over the economy. They further claimed that his policies failed to improve the economic condition of the average Tanzanian.

His supporters argued that attracting foreign investment was the only way to achieve economic growth. His policies won the support of the World Bank and IMF and resulted in the cancellation of some of Tanzania's foreign debts.