Table of Contents

Handbook on the Economics of Foreign Aid

Handbook on the Economics of Foreign Aid

Edited by B. Mak Arvin and Byron Lew

It would be fair to say that foreign aid today is one of the most important factors in international relations and in the national economy of many countries – as well as one of the most researched fields in economics. Although much has been written on the subject of foreign aid, this book contributes by taking stock of knowledge in the field, with chapters summarizing long-standing debates as well as the latest advances. Several contributions provide new analytical insights or empirical evidence on different aspects of aid. As a whole, the book demonstrate how researchers have dealt with increasingly complex issues over time – both theoretical and empirical – on the allocation, impact, and efficacy of aid, with aid policies placed at the center of the discussion.

Chapter 20: Finally a breakthrough? The recent rise in the size of the estimates of aid effectiveness

Hristos Doucouliagos and Martin Paldam

Subjects: development studies, development economics, economics and finance, development economics, politics and public policy, international relations


If development aid increases development, we say that aid is effective. It is an important and debated question if this is the case. The debate has led to the empirical aid effectiveness literature (AEL), which by now consists of more than 200 papers containing more than 2000 estimates of aid effectiveness. The results vary greatly.

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