Working Paper: CEPR ID: DP18417
Authors: Axel Dreher; Valentin Lang; Bernhard Reinsberg
Abstract: A vast literature evaluates the effectiveness of development aid, often reaching sobering conclusions. We argue that a key shortcoming of this literature is the focus on a narrow concept of effectiveness—mostly economic growth—that does not match the kind of effectiveness that aid donors actually aim at. To determine actual donor motives, we first survey the literature on aid allocation and identify a large set of motives that is common to many donors. We then employ this set of donor motives for compiling a survey of the aid effectiveness literature by donor motive. The literature shows that while aid has a moderate effect on economic development at best, it seems effective in achieving many of the other effects primarily intended by aid donors. We conclude by speculating that future research on aid effectiveness will be more likely to identify significant effects of aid when taking donor motives into account.
Keywords: aid allocation; aid effectiveness; fungibility; donor motives
JEL Codes: F35
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| aid (F35) | political concessions (D72) |
| aid (F35) | trade facilitation (F13) |
| aid (F35) | conflict mitigation (D74) |
| aid (F35) | migration flows (F22) |
| donor motives (D64) | aid effectiveness (F35) |
| aid (F35) | economic development (O29) |