An earlier version of this paper was presented at the meeting of the DSA Economics, Finance and Development Study Group entitled 50 Years of Development Economics: Taking Stock of Controversies, held at the Overseas Development Institute, London, in July 2003. The authors are grateful to participants at the 2003 meeting, Michael Tribe in particular, and to two anonymous referees for many useful comments. The usual disclaimer applies.
Controversies over the impact of development aid: it works; it doesn't; it can, but that depends …†
Article first published online: 20 SEP 2006
Copyright © 2006 John Wiley & Sons, Ltd.
Journal of International Development
Volume 18, Issue 7, pages 1031–1050, October 2006
How to Cite
McGillivray, M., Feeny, S., Hermes, N. and Lensink, R. (2006), Controversies over the impact of development aid: it works; it doesn't; it can, but that depends …. J. Int. Dev., 18: 1031–1050. doi: 10.1002/jid.1335
- Issue published online: 20 SEP 2006
- Article first published online: 20 SEP 2006
- foreign aid;
- economic growth;
- foreign exchange;
This paper surveys five decades of empirical research on the macroeconomic impact of aid, looking mainly at studies examining the link between aid and growth. It argues that studies dating until the late 1990s produced either contradictory or inconclusive results. Aid either worked, or it didn't, according to this research. The paper then highlights a major shift in the literature that coincided with the release of the World Bank's Assessing Aid: What Works, What Doesn't and Why. Practically, all research published since that report agrees with its general finding that aid works to the extent that in its absence, growth would be lower. One controversy may therefore have been settled. Yet, as shown in this paper, the report has set-off an intense debate over the context in which aid works. That debate centres on whether the effectiveness of these inflows depends on the policy regime of recipient countries. Some possible avenues through which the heat might be taken out of this debate are considered. Copyright © 2006 John Wiley & Sons, Ltd.