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Aid and Economic Performance - The Case of Tanzania

Falck, Hans LU (1997) In Lund Economic Studies 65.
Abstract
The objective of this study is to contribute to the knowledge about the effects of foreign aid in Tanzania during the period 1964-93. However, such a study is also relevant from a more general perspective since the results can hopefully be relevant for other aid-recipient countries.



Chapter 2 presents the size, forms, and allocation of the foreign aid inflow to Tanzania during the four aid regimes. The Dutch Disease theory states that large capital inflows, such as an inflow of foreign aid, should give rise to an appreciation of the real exchange rate. In Chapter 3 we present the Dutch Disease theory, calculate real exchange rate indexes and test econometrically the Dutch Disease theory in the case of Tanzania.

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The objective of this study is to contribute to the knowledge about the effects of foreign aid in Tanzania during the period 1964-93. However, such a study is also relevant from a more general perspective since the results can hopefully be relevant for other aid-recipient countries.



Chapter 2 presents the size, forms, and allocation of the foreign aid inflow to Tanzania during the four aid regimes. The Dutch Disease theory states that large capital inflows, such as an inflow of foreign aid, should give rise to an appreciation of the real exchange rate. In Chapter 3 we present the Dutch Disease theory, calculate real exchange rate indexes and test econometrically the Dutch Disease theory in the case of Tanzania.



The impact of aid depends also on its forms. Different forms of aid give rise to different effects that may counteract each other. In Chapter 4 the effects of different forms of aid on the resource allocation are analysed. For this purpose we develop a general equilibrium four-sector model which will allow us to explicitly consider a subsistence sector in addition to the formal sectors of the economy. Here our analysis differs from the three-sector framework normally used in Dutch Disease models.



How then do the 'predictions' of our model analysis correspond to the actual Tanzanian development? In Chapter 5 we analyse in our four-sector model the expected effects of the aid inflow to Tanzania on the basis of the information provided in Chapter 2. Then we compare the expected effects with the actual development of the Tanzanian economy during the four aid regimes. Which are then the determinants of aid? Chapter 6 briefly analyses some political economy factors that shaped aid to Tanzania. (Less)
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author
opponent
  • Dr Morrisey, Oliver, University of Nottingham
organization
publishing date
type
Thesis
publication status
published
subject
keywords
Economics of development, real exchange rate, resource allocation, Dutch Disease, foreign aid, forms of aid, Utvecklingsekonomi
in
Lund Economic Studies
volume
65
pages
171 pages
publisher
Hans Falck Department of Economics P.O.Box 7082 220 07 LUND Sweden,
defense location
Carolinasalen
defense date
1997-04-18 10:15
external identifiers
  • other:ISRN: LUSADG/SANA - - 97/1047 - - SE
ISSN
0460-0029
language
English
LU publication?
yes
id
371b9d88-908c-43b7-b619-522f6dadf63c (old id 18426)
date added to LUP
2007-05-24 11:30:56
date last changed
2016-09-19 08:44:52
@phdthesis{371b9d88-908c-43b7-b619-522f6dadf63c,
  abstract     = {The objective of this study is to contribute to the knowledge about the effects of foreign aid in Tanzania during the period 1964-93. However, such a study is also relevant from a more general perspective since the results can hopefully be relevant for other aid-recipient countries.<br/><br>
<br/><br>
Chapter 2 presents the size, forms, and allocation of the foreign aid inflow to Tanzania during the four aid regimes. The Dutch Disease theory states that large capital inflows, such as an inflow of foreign aid, should give rise to an appreciation of the real exchange rate. In Chapter 3 we present the Dutch Disease theory, calculate real exchange rate indexes and test econometrically the Dutch Disease theory in the case of Tanzania.<br/><br>
<br/><br>
The impact of aid depends also on its forms. Different forms of aid give rise to different effects that may counteract each other. In Chapter 4 the effects of different forms of aid on the resource allocation are analysed. For this purpose we develop a general equilibrium four-sector model which will allow us to explicitly consider a subsistence sector in addition to the formal sectors of the economy. Here our analysis differs from the three-sector framework normally used in Dutch Disease models.<br/><br>
<br/><br>
How then do the 'predictions' of our model analysis correspond to the actual Tanzanian development? In Chapter 5 we analyse in our four-sector model the expected effects of the aid inflow to Tanzania on the basis of the information provided in Chapter 2. Then we compare the expected effects with the actual development of the Tanzanian economy during the four aid regimes. Which are then the determinants of aid? Chapter 6 briefly analyses some political economy factors that shaped aid to Tanzania.},
  author       = {Falck, Hans},
  issn         = {0460-0029},
  keyword      = {Economics of development,real exchange rate,resource allocation,Dutch Disease,foreign aid,forms of aid,Utvecklingsekonomi},
  language     = {eng},
  pages        = {171},
  publisher    = {Hans Falck Department of Economics P.O.Box 7082 220 07 LUND Sweden,},
  school       = {Lund University},
  series       = {Lund Economic Studies},
  title        = {Aid and Economic Performance - The Case of Tanzania},
  volume       = {65},
  year         = {1997},
}