Recent research offers differing assessments of the overall, worldwide effect of foreign aid on economic growth in the countries that receive aid. To understand these differences, we re-analyze the same data and same regressions used in the three most influential aid-growth studies. In all three, increases in aid have been followed on average by modest increases in investment and growth. The most plausible explanation is that aid causes some degree of growth in recipient countries, though the magnitude of this relationship is modest, varies greatly across recipients, and diminishes at high levels of aid.
The Trouble with the MDGs: Confronting Expectations of Aid and Development Success - Working Paper 40
*REVISED Version September 2004
The Millennium Development Goals (MDGs) are unlikely to be met by 2015, even if huge increases in development assistance materialize. The rates of progress required by many of the goals are at the edges of or beyond historical precedent. Many countries making extraordinarily rapid progress on MDG indicators, due in large part to aid, will nonetheless not reach the MDGs. Unrealistic targets thus may turn successes into perceptions of failure, serving to undermine future constituencies for aid (in donors) and reform (in recipients). This would be unfortunate given the vital role of aid and reform in the development process and the need for long-term, sustained aid commitments.
This work quantifies how long it has taken countries rich and poor to make the transition towards high enrollments and gender parity. It finds that many countries that have not raised enrollments fast enough to meet the Millennium Development Goals have in fact raised enrollments extraordinarily rapidly by historical standards and deserve celebration rather than condemnation. The very few poor countries that have raised enrollment figures at the rates envisioned by the goals have done so in many cases by accepting dramatic declines in schooling quality, failing large numbers of students, or other practices that cast doubt on the sustainability or exportability of their techniques.