Perils of International Capital

"Attracting financial capital is essential for economic growth in developing countries, but can often tragically foster nondemocratic politics. Consider, for example, the impact of foreign aid. Since 2008 Ethiopia has been one of the largest recipients of U.S. aid in Africa, averaging around $80 million per year. While intended to foster economic development, increasingly practitioners are growing wary of the aid's political ramifications. Before the Ethiopian national election in 2010, foreign donors were charged with "subsidizing a regime that is rapidly becoming one of the most repressive and dictatorial on the continent." Western aid officials "seem reluctant to admit that there are two Prime Minister Meles Zenawis. One is a clubbable, charming African who gives moving speeches at Davos and other elite forums about fighting poverty and terrorism. The other is a dictator whose totalitarianism dates backs to Cold War days.""--