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Making Progress on Foreign Aid

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Listed:
  • Nancy Qian

    (Department of Economics, Yale University, New Haven, Connecticut 06520
    Bureau for Research and Economic Analysis of Development, Duke University, Durham, North Carolina 27708
    Centre for Economic Policy Research, London EC1V 3PZ, United Kingdom
    National Bureau of Economic Research, Cambridge, Massachusetts 02138)

Abstract

Foreign aid is one of the most important policy tools that rich countries use to help poor countries improve population well-being and facilitate economic and institutional development. The empirical evidence on its benefits is mixed and has generated much controversy. This article presents descriptive statistics that show that foreign aid to very poor countries accounts for very little of total global aid; reviews the evidence that foreign aid is often determined by the objectives of donor countries rather than the needs of recipient countries; argues that the evidence on the impact of aggregate foreign aid is hindered by problems of measurement and identification, which partly result from the heterogeneous nature of aid; and discusses recent studies using natural and randomized experiments to examine narrowed definitions of aid on more disaggregated outcomes.

Suggested Citation

  • Nancy Qian, 2015. "Making Progress on Foreign Aid," Annual Review of Economics, Annual Reviews, vol. 7(1), pages 277-308, August.
    • Handle: RePEc:anr:reveco:v:7:y:2015:p:277-308
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    File URL: http://www.annualreviews.org/doi/abs/10.1146/annurev-economics-080614-115553
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    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O2 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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