Abstract:
"Poor countries are believed to be trapped in a vicious circle of poverty where low incomes lead to low savings and insufficient resources for investments. Foreign aid is supposed to boost investment and link poor countries to a virtuous circle of growth. But real per capita growth has not been present in the modern history of Kenya and Tanzania - even though foreign aid has increased many times over. Does the recent history in Uganda pave the way for new principles of efficient aid, or is it just a rare occasion of aid-induced behavioural change?" Copyright (c) Institute of Economic Affairs 2003.