The End of Poverty Alleviation? Effects of Shifting Global Wealth on Aid Allocation and Graduation from Foreign Aid Eligibility

What happens to foreign aid when developing countries get richer?In this paper, I first show that, since the mid-1990s, many recipients of official development assistance have been experiencing sustained economic progress and that they are projected to do so. I proceed with presenting historical evidence as well as estimates of the quantitative implications of increasing GDP per capita for aid allocation. Special focus is given to the under-researched phenomenon of “aid graduation”, i.e. the point where developing countries cease to be eligible for public aid giving in accordance with OECD standards. Finally, I examine broader politico-economic implications of graduation for foreign aid as a redistributive institution and for our understanding of aid