Aid, Growth and Poverty

By: Andy Sumner and Jonathan Glennie

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Synopsis: The authors discuss the impact of foreign aid and tackle the question of why assessing the impact of aid isso difficult. The authors focus on peer-reviewed, cross-country studies published overthe last decade and draw together some global-level assessments, considering the context and conditions under whichaid might be said to 'work'. Glennie and Sumner argue that the evidence in four areas shows signsof convergence that may have direct relevance for policy decisions on aid andfor aid effectiveness discussions. These are as follows: Aidlevels (meaning if aid is too low or too high); Domestic political institutions(including political stability and extent of decentralisation); Aid composition(including sectors, modalities, objectives and time horizons); and Aidvolatility and fragmentation. Notably, this study finds that there is no consensus that theeffectiveness of aid depends on orthodox economic policies.