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Making Progress on Foreign Aid

Listed author(s):
  • 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)

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.

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File URL: http://www.annualreviews.org/doi/abs/10.1146/annurev-economics-080614-115553
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Article provided by Annual Reviews in its journal Annual Review of Economics.

Volume (Year): 7 (2015)
Issue (Month): 1 (August)
Pages: 277-308

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Handle: RePEc:anr:reveco:v:7:y:2015:p:277-308
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  1. Alesina, Alberto & Dollar, David, 2000. "Who Gives Foreign Aid to Whom and Why?," Journal of Economic Growth, Springer, vol. 5(1), pages 33-63, March.
  2. David Roodman, 2007. "The Anarchy of Numbers: Aid, Development, and Cross-Country Empirics," World Bank Economic Review, World Bank Group, vol. 21(2), pages 255-277, May.
  3. Nicholas Eubank, 2012. "Taxation, Political Accountability and Foreign Aid: Lessons from Somaliland," Journal of Development Studies, Taylor & Francis Journals, vol. 48(4), pages 465-480, March.
  4. Nathan Nunn & Nancy Qian, 2014. "US Food Aid and Civil Conflict," American Economic Review, American Economic Association, vol. 104(6), pages 1630-1666, June.
  5. Carl-Johan Dalgaard & Henrik Hansen & Finn Tarp, 2004. "On The Empirics of Foreign Aid and Growth," Economic Journal, Royal Economic Society, vol. 114(496), pages 191-216, 06.
  6. Katherine Casey & Rachel Glennerster & Edward Miguel, 2012. "Reshaping Institutions: Evidence on Aid Impacts Using a Preanalysis Plan," The Quarterly Journal of Economics, Oxford University Press, vol. 127(4), pages 1755-1812.
  7. Benjamin Crost & Joseph Felter & Patrick Johnston, 2014. "Aid under Fire: Development Projects and Civil Conflict," American Economic Review, American Economic Association, vol. 104(6), pages 1833-1856, June.
  8. Benjamin A. Olken & Junko Onishi & Susan Wong, 2012. "Should Aid Reward Performance? Evidence from a Field Experiment on Health and Education in Indonesia," NBER Working Papers 17892, National Bureau of Economic Research, Inc.
  9. Michael Faye & Paul Niehaus, 2012. "Political Aid Cycles," American Economic Review, American Economic Association, vol. 102(7), pages 3516-3530, December.
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