With the onset of globalization one-party state regimes were forced to liberalize politically and economically. Liberalization was seen as beneficial for it opened up both the political and economic space for all actors in the development process. Liberalization was embraced because of its perceived advantages to all sections of society: allowing citizens to participate in decision-making on matters affecting their lives and allowing and facilitating, among others, the private sector to take the lead role in economic development (engine of growth). This paper argues that political and economic liberalization has not brought the intended outcomes in Tanzania. It is observed that some positive changes have occurred but the unintended outcomes outweigh by far the advantages. In fact there is in Tanzania a notable reversal of the gains the country has had before it embarked on liberalization politically and economically. The reversal is more apparent in the policymaking process where foreign influences dominate national interests. The paper argues further that the reasons advanced for countries like Tanzania to embark on wholesale liberalization are spurious. Foreign interests in general and flag bearers of neo-liberalism in particular are bent on sustaining their domination of developing countries under the guise of advocacy for good governance.