Financial Times writes about the foreign aid debate,
“The battlefield is littered with the bodies of simplistic theories about poverty and failure, for every one of which there is a contradiction. Africa is poor because it has had bloodstained and kleptomaniac dictators, for example, ignores the fact that so has Indonesia, whose record on growth and poverty reduction compares rather favourably with the self-confessed failure of Tanzania’s remarkably decent and honest Julius Nyerere.”
There is no mystery here. Generous aid to Tanzania did a lot of damage by funding a government and a political party that carried out a truly remarkable set of harebrained policies.
How did Tanzania manage to attract so much aid? In spite of presiding over a one-party state, Nyerere was widely perceived as being a Third World Social Democrat. Tanzania therefore received large amounts of aid from countries where Social Democratic parties were strong; Scandinavia, Holland, Canada and Germany.
|Real GDP per Capita||Aid as % of GDI|
Real GDP per capita in constant prices. Aid as percentage of Gross Domestic Investment only available 1988-2003. Data source: NYU’s Global Development Network Growth Database.