This paper evaluates aid both by considering the evidence on aid effectiveness in promoting growth and by considering how effective has aid been in exerting leverage on policy choices. We argue that in both respects aid has had beneficial effects. It is rather easy to demonstrate that if a...

This paper is a contribution to the literature on aid and growth. Despite an extensive empirical literature in this area, existing studies have not addressed directly the mechanisms via which aid should affect growth. We identify investment as the most significant transmission mechanism, and...

Is aid effective in increasing growth rates of recipient countries? This is the burning question in any economic evaluation of aid effectiveness, yet there is no consensus on the answer. Recent advances in growth theory help us to identify the various mechanisms by which aid can increase growth,...