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Making Progress on Foreign Aid


  • Qian, Nancy


Foreign aid is one of the most important policy tools that rich countries use for helping poor countries to improve population well-being and facilitate economic and institutional development. The empirical evidence on its benefits is mixed and has generated much controversy. This paper presents descriptive statistics which 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 are partly due to the heterogenous nature of aid; and discusses recent studies using natural and randomized experiments to examine narrowed definitions of aid on more disaggregated outcomes.

Suggested Citation

  • Qian, Nancy, 2014. "Making Progress on Foreign Aid," CEPR Discussion Papers 10129, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:10129

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    References listed on IDEAS

    1. Nathan Nunn & Nancy Qian, 2014. "US Food Aid and Civil Conflict," American Economic Review, American Economic Association, vol. 104(6), pages 1630-1666, June.
    2. 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.
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    8. 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.
    9. 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.
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    Cited by:

    1. Matthew S. Winters, 2019. "Too Many Cooks in the Kitchen? The Division of Financing in World Bank Projects and Project Performance," Politics and Governance, Cogitatio Press, vol. 7(2), pages 117-126.
    2. Temple, Jonathan & Van de Sijpe, Nicolas, 2017. "Foreign aid and domestic absorption," Journal of International Economics, Elsevier, vol. 108(C), pages 431-443.
    3. Julia Braun & Martin Zagler, 2018. "The true art of the tax deal: Evidence on aid flows and bilateral double tax agreements," The World Economy, Wiley Blackwell, vol. 41(6), pages 1478-1507, June.
    4. Kotsadam, Andreas & Østby, Gudrun & Rustad, Siri Aas & Tollefsen, Andreas Forø & Urdal, Henrik, 2018. "Development aid and infant mortality. Micro-level evidence from Nigeria," World Development, Elsevier, vol. 105(C), pages 59-69.
    5. Lanati, Mauro & Thiele, Rainer, 2018. "The impact of foreign aid on migration revisited," World Development, Elsevier, vol. 111(C), pages 59-74.
    6. Erika Deserranno & Aisha Nansamba & Nancy Qian, 2020. "Aid Crowd-Out: The Effect of NGOs on Government-Provided Public Services," NBER Working Papers 26928, National Bureau of Economic Research, Inc.
    7. Marco Caselli, 2019. "“Let Us Help Them at Home”: Policies and Misunderstandings on Migrant Flows Across the Mediterranean Border," Journal of International Migration and Integration, Springer, vol. 20(4), pages 983-993, November.
    8. Isaksson, Ann-Sofie & Kotsadam, Andreas, 2018. "Chinese aid and local corruption," Journal of Public Economics, Elsevier, vol. 159(C), pages 146-159.
    9. Sebastian Galiani & Stephen Knack & Lixin Colin Xu & Ben Zou, 2017. "The effect of aid on growth: evidence from a Quasi-experiment," Journal of Economic Growth, Springer, vol. 22(1), pages 1-33, March.
    10. Opoku-Agyemang, Kweku A., 2017. "Priming human-computer interactions: Experimental evidence from economic development mobile surveys," SocArXiv 6bwxv, Center for Open Science.
    11. Matthew S. Winters, 2019. "Too many cooks in the kitchen?: The division of financing in World Bank projects and project performance," WIDER Working Paper Series wp-2019-6, World Institute for Development Economic Research (UNU-WIDER).
    12. Carter, Patrick, 2017. "Aid econometrics: Lessons from a stochastic growth model," Journal of International Money and Finance, Elsevier, vol. 77(C), pages 216-232.
    13. Edgar H. Sanchez-Cuevas, 2018. "Fighting Fire with Aid: Development Assistance as Counterinsurency Tool. Evidence for Colombia," Documentos CEDE 016378, Universidad de los Andes - CEDE.
    14. Juergen Bitzer & Erkan Goeren, 2018. "Foreign Aid and Subnational Development: A Grid Cell Analysis," Working Papers V-407-18, University of Oldenburg, Department of Economics, revised Mar 2018.
    15. Curtis, Devon E. A., 2014. "Local agency, development assistance and the legacies of rebellion in Burundi and Rwanda," WIDER Working Paper Series 128, World Institute for Development Economic Research (UNU-WIDER).
    16. Dipendra, K.C., 2020. "Which aid targets poor at the sub-national level?," World Development Perspectives, Elsevier, vol. 17(C).
    17. Berrittella, Maria, 2017. "Can stability of foreign aid agreement reduce global income inequality?," Economic Analysis and Policy, Elsevier, vol. 54(C), pages 105-111.
    18. Daniel Y. Kono & Gabriella R. Montinola, 2019. "Foreign aid and climate change policy: What can('t) the data tell us?," WIDER Working Paper Series wp-2019-15, World Institute for Development Economic Research (UNU-WIDER).
    19. Ademmer, Esther & Akgüç, Mehtap & Barslund, Mikkel & Di Bartolomeo, Anna & Benček, David & Groll, Dominik & Hoxhaj, Rezart & Lanati, Mauro & Laurentsyeva, Nadzeya & Lücke, Matthias & Ludolph, Lars & R, 2017. "2017 MEDAM Assessment Report on Asylum and Migration Policies in Europe. Sharing responsibility for refugees and expanding legal immigration," MEDAM Assessment Report on Asylum and Migration Policies in Europe, Mercator Dialogue on Asylum and Migration (MEDAM), number 182239.
    20. Cheong, Juyoung & Kwak, Do Won & Yuan, Haishan, 2017. "Trade to aid: EU's temporary tariff waivers for flood-hit Pakistan," Journal of Development Economics, Elsevier, vol. 125(C), pages 70-88.
    21. Knutsen, Tora & Kotsadam, Andreas, 2020. "The political economy of aid allocation: Aid and incumbency at the local level in Sub Saharan Africa," World Development, Elsevier, vol. 127(C).
    22. MARINOV, Eduard, 2017. "The Link Between Official Development Assistance And International Trade Flows – Insights From Economic Theory," Journal of Financial and Monetary Economics, Centre of Financial and Monetary Research "Victor Slavescu", vol. 4(1), pages 239-247.

    More about this item


    development; global poverty; political economy;

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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