We examine the impact of institutional quality and social capital on aid effectiveness. We find strong evidence that social capital and institutions enhance aid effectiveness. Moreover, once we account for the role of social capital and institutions, the impact of policies tend to disappear....

This paper analyses the decentralization of decisionmaking in aid-giving in a theoretical rent-seeking framework. In this analysis the root donor establishes a necessary criterion for potential recipients: good governance. The potential recipients compete in hierarchal contests for funds. The...

The Millennium Development Goals (MDGs) have lofty expectations regarding the impact of official development aid. Are these expectations valid? This paper surveys the literature on aid and growth. It finds that practically all aid studies since the late 1990s conclude that aid increases economic...

The paper performs aid allocation analysis using OECD-DAC data covering 20 aid donors and 176 recipients over the period 1980-2003. We improve upon earlier work in this area by employing inter alia the variable ‘past outcome’ measuring aid effectiveness in order to link together aid...

The paper contributes to the empirics of aid and growth by taking a fresh look at the aid-policies-growth nexus emanating from the very influential but also debatable paper on the subject by Burnside and Dollar: ‘Aid, Policies and Growth’. We employ three different datasets (including the...

The present paper is a first attempt to develop a theoretical model using a short-term vis-à-vis long-term contract framework within which donor countries’ endorsement or rejection decision towards the recently proposed International Finance Facility (IFF) is rationalized. The current foreign...

Understanding the development effects of official aid is crucial to building a better bridge between research and policy. This paper reviews the current evidence regarding the impact of aid on growth and poverty reduction, and develops a new narrative. In the light of this narrative, the paper...

This study econometrically evaluates the short-run impact of aid in small developing countries (SDCs) by applying a VAR model to study aid's impact on 'absorption' (increasing import demand) and 'spending' (increased domestic demand) across countries. Whilst our approach allows parameters to...