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Making Progress on Foreign Aid

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  • Nancy Qian

Abstract

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

  • Nancy Qian, 2014. "Making Progress on Foreign Aid," NBER Working Papers 20412, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:20412
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    References listed on IDEAS

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    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.
    3. 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.
    4. Michael Faye & Paul Niehaus, 2012. "Political Aid Cycles," American Economic Review, American Economic Association, vol. 102(7), pages 3516-3530, December.
    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, June.
    6. 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.
    7. 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.
    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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    Citations

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    Cited by:

    1. Temple, Jonathan & Van de Sijpe, Nicolas, 2017. "Foreign aid and domestic absorption," Journal of International Economics, Elsevier, vol. 108(C), pages 431-443.
    2. 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.
    3. repec:eee:wdevel:v:105:y:2018:i:c:p:59-69 is not listed on IDEAS
    4. Isaksson, Ann-Sofie & Kotsadam, Andreas, 2018. "Chinese aid and local corruption," Journal of Public Economics, Elsevier, vol. 159(C), pages 146-159.
    5. 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.
    6. repec:eee:jimfin:v:77:y:2017:i:c:p:216-232 is not listed on IDEAS
    7. 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.
    8. 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).
    9. repec:eee:ecanpo:v:54:y:2017:i:c:p:105-111 is not listed on IDEAS
    10. Carter, Patrick, 2017. "Aid econometrics: Lessons from a stochastic growth model," Journal of International Money and Finance, Elsevier, vol. 77(C), pages 216-232.
    11. Cheong, Juyoung & Won Kwak, Do & 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.
    12. repec:vls:rojfme:v:4:y:2017:i:1:p:239-247 is not listed on IDEAS

    More about this item

    JEL classification:

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

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