Scholars have long debated the positive and negative effects of development aid on the economies and societies of developing countries. Recently, this debate has seen renewed vigor due to the disappointing results of efforts aimed at fighting poverty in Africa. While some scholars argue that, if properly managed, development aid can stimulate economic growth and reduce poverty, others contend that, in the long term, foreign aid deepens recipient countries' political and intellectual dependence and very often does not benefit the people who need it most. Sebastian Edwards's book aims at contributing to this debate through an analysis of “the role played by foreign donors . . . both in the collapse of [Tanzania] in the early 1980s, as well as during its subsequent recovery” (p. 6).

After a brief review of the main schools of thought on economic development and the role of foreign aid in promoting it (chapter 3), and a cursory overview of the evolution of Western aid flows to Tanzania after independence (chapter 4), the book addresses the development policies implemented by the Tanzanian government during the long presidency of Julius Nyerere (1962–1985) and the support it received from Western countries (chapter 5).

After independence, the Tanzanian government tried to promote industrialization and stimulate agricultural production through private investments, foreign aid, and limited state intervention in the economy. However, in the mid-1960s the slow rate of economic growth and the deterioration of relations with Western governments pushed Nyerere to reassess the Tanzanian development strategy and to adopt ujamaa, a socialist vision aimed at accelerating economic growth through agriculture and self-reliance.

In the late 1970s the signs of Tanzania's economic crisis were already visible. Edwards recognizes that international (the oil crisis), regional (the war against Idi Amin's Uganda), and natural factors (recurrent droughts) played a role in the economic crisis of Tanzania, but he emphasizes how the implementation of wrong policies and Nyerere's principled opposition to the policy prescriptions of the International Monetary Fund (IMF)—and in particular to the devaluation of the Tanzanian shilling—made the effects of the economic crisis much worse in the first half of the 1980s.

The causes of the crisis of ujamaa have been abundantly debated in the literature. The author's relevant contribution to this debate is to be found in his analysis of the role, too often forgotten, played by the Western donors in this policy failure. Edwards argues that bilateral and multilateral donors increased their aid to Tanzania in the period from 1969 to 1981 because of Nyerere's charismatic leadership; Tanzania's determination to chart its own development path, resisting any foreign interference; and the egalitarian aims of ujamaa. In this way, the Western donors helped implement a top-down development vision that brought about a marked improvement in the country's social indicators, but at a heavy cost for small farmers. Industrialization did not take off, and the extensive state intervention in the economy inflated the civil service and loss-making parastatals.

Edwards's critical analysis of the role played by Western aid in the economic fiasco of ujamaa could have been strengthened, had he devoted more attention to both the contradictory effects on ujamaa of donors' largesse and the political motivations that pushed some Western donors to provide such generous support. Not long ago, Severine Rugumamu, in his book Lethal Aid (1997)—which strangely enough is not listed among the references—argued that Western donors contributed to the failure of ujamaa because they fragmented the Tanzanian government's development strategy, reinforced the bureaucratization of that strategy, and, contrary to the aims of the Arusha Declaration, deepened Tanzania's dependency on foreign aid.

As for the motivations behind the generous Western aid flows to Tanzania, Edwards's analysis seems to downplay the crucial role that Tanzania played in southern Africa during the Cold War. Within this context, ujamaa was really a peculiar socialist experiment, since the Soviet Union gave it only limited support. Nyerere's determination to keep the Soviet Union at arm's length had already been shown in 1964, when the establishment of the Union between Zanzibar and Tanganyika averted the risk that Zanzibar would become a bridgehead for Soviet penetration into eastern and southern Africa. Then, during the 1960s and the 1970s, Nyerere actively cooperated with the Western governments in search of a political settlement for Rhodesia. Crucially, it was China (and not the U.S.S.R.) that backed Nyerere's political standing in the region, by providing Tanzania with generous development aid (the Tanzania–Zambia Railway is a case in point) and supplying the Zimbabwe African National Union with weapons to fight Ian Smith's white-supremacist regime in Rhodesia. Unfortunately, Edwards's analysis focuses mainly on Western aid to Tanzania and so does not investigate the impact of Chinese aid on ujamaa.

In addition, with limited attention paid to the Cold War factor in Tanzania's foreign relations, Edwards also downplays the fact that Swedish aid to Tanzania resulted not only from the Swedish government's determination to support an African alternative development vision, but also was part of a broader strategy aimed at supporting the struggle against racism and colonialism in southern Africa.

The main thesis of the book is that while during the 1960s and the 1970s Western aid supported an authoritarian and economically unsustainable socialist experiment in Tanzania, this stance changed in the early 1980s, after the IMF had conditioned the release of its financial aid to a radical liberalization of the Tanzanian economy. According to Edwards, the mid-1980s was a turning point, as the Nordic countries also sided with the IMF and stopped providing aid to Tanzania. The arm wrestling between the IMF and Nyerere has already been the subject of an extensive literature. As the former insisted on the need for the Tanzanian government to devalue the shilling and implement a number of economic reforms, the latter refused to follow the policy prescriptions of an institution that he considered an “international bully controlled by the major capitalist powers” (p. 106). Then, within the context of a deepening economic and social crisis, in 1985 Nyerere stepped down from the presidency, opening the way to an agreement between the IMF and the new Tanzanian government headed by Ali Hassan Mwynyi.

In the mid-1980s the Tanzanian government started implementing an extensive program of economic liberalization. While during the first decade of economic reforms, growth remained stagnant, since the mid-1990s it steadily increased. In light of Edwards's emphasis on the need to exert great caution in the use of Tanzania's economic data series, the mechanical cause-and-effect relationship he detects in his analysis of the impact of reforms on Tanzania's economic performance from the mid-1980s to the late 1990s seems a bit surprising.

In the last two chapters of the book, Edwards argues that Tanzania cannot be considered a reform “success story” because, among other reasons, poverty remains widespread in spite of the country's high rates of economic growth. Unfortunately, he does not try to explain why economic reforms have not translated into significant poverty reduction and better social services, especially in rural areas. This would certainly have strengthened his analysis of the contribution of foreign aid to the economic development of contemporary Tanzania.