Foreign aid is frequently cast as providing donors with a tool to secure political and economic influence. This insight leads to a number of puzzles. First, if donors compete for influence in developing countries, they are expected to expand aid commitments in the process. Yet, aid chronically...

It continues to be heavily disputed whether foreign aid promotes economic growth in developing countries. In most cross-country regressions, aid is considered effective only if it shifts recipient countries to a significantly higher and sustainable growth path. We apply an alternative approach...