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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
    Note: DEV POL
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    References listed on IDEAS

    as
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    JEL classification:

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

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