How does foreign aid associate to the economic growth in Tanzania?

Abstract: Foreign aid’s effect in developing economies has been a discussed topic for decades. Many scholars have been debating on whether foreign aid increases or decreases economic growth in the recipient country. Yet, this debate may never be put to rest as the conclusions may vary depending on the study. There are different types of aid which yields different outcomes depending on the social- economic status of the recipient country. Historically, Tanzania has been under major economic and political reforms since the 1970s which enhanced the country to benefit from foreign aid tremendously on the recent decades. Therefore, this arises the question of how does foreign aid associate to the economic growth in Tanzania? The purpose for this paper is to understand how effective foreign aid is on Tanzania’s economy but also to understand what role aid can have on recipient countries. To be able to analyze this, a cross sectional analysis was done on 6 Sub-Saharan African countries including Tanzania over the time period of 1980-2017. Previous studies discussed the effectiveness of foreign aid on the economy, thereby our theoretical framework suggests foreign aid could be used as tool to increase economic growth through different factors of growth such as investments and capital. Our results conclude that foreign aid have a negative association  on the economic growth in Tanzania. Although other variables such as corruption showed significant association on the economic growth.