international aid essay

89 Foreign Aid Essay Topic Ideas & Examples

🏆 best foreign aid topic ideas & essay examples, 📑 interesting topics to write about foreign aid, 🔎 good essay topics on foreign aid, ❓ questions about foreign aid.

• Liberia’s War, Peace, and Foreign Aid According to the data provided by the World Bank Group, Liberia has been receiving FA since before the 1980s, and its amount has had the tendency to increase with some of the years breaking this […]
• Foreign Aid and Economic Growth in Developing States The paper under analysis covers the topic of the relationship between foreign aid and economic growth in developing countries. There is a raging debate on the real effect of foreign aid on developing countries, and […] We will write a custom essay specifically for you by our professional experts 808 writers online Learn More
• US Foreign Aid and Its Strategic National Interest The national interest for the United States is to have peace all over the world, freedom for all and finally to create opportunities for all nations to develop.
• Foreign Aid Impact on Bosnia In addition to the rehabilitation of schools, buildings within the Ministry of Education were also reconstructed. The financial aid has enabled reconstruction of various economic sectors such as education, health and infrastructure.
• Positive and Negative Implications of Foreign Aid Foreign aid of any kind is offered for the benefit of the receiving country but the donor country may equally benefit indirectly or directly in the event that it wishes to attain any of the […]
• Foreign Aid: Detrimental or Beneficial? In the past, Egypt and Israel, due to their location in the Middle East and cordial relationships with the west, have been the major beneficiaries of foreign aid.
• War and Peace Effects on Foreign Aid in Kenya President Uhuru Kenyatta of Kenya and his leadership has ensured that foreign aid is allocated to various programs that will ensure peace prevails in the country.
• War and Peace Effects on Foreign Aid in Sudan Also, at the end of the war, it was decided to allocate a considerable amount of money to Sudan by the European Commission for the reconstruction of the country after its crisis.
• Effects of War and Peace on Foreign Aid Recently, the leadership of Kenya discovered that a number of organizations operating in Kenya have been using foreign aid to support the operations of the Al-Shabaab terror group.
• War and Peace Effects on Foreign Aid in Madagascar The lack of systems to ensure that the citizens are the real beneficiaries of foreign aid continues to hamper the ability of Madagascar to sustain its peace process.
• War and Peace Effects on Foreign Aid in the Dominican Republic During instances of civil unrest and peace, donors have attempted to link the foreign aid provided to the Dominican Republic to increased protection of human rights, the establishment of democratic ideals and institutions, cessation of […]
• Foreign Aid in Africa: Countries Experiences Learning Despite the fact that most of the aid given to African countries is meant to help the people who are not able to access their basic needs, most of the money ends up in the […]
• The UN Foreign Aid for Lebanon Analysis Speaking about the wars and conflicts which had a great impact on the country, it is possible to admit the role of foreign countries and United Nations in the attempts to make the compromise and […]
• Impact of Foreign Aid on Sub Saharan Africa This occurs due to lack of transparency on the side of sub Saharan African countries on the purpose of the foreign aid leading to cynicisms.
• War and Peace Effects on Foreign Aid in Bangladesh Despite the fact that the effects of foreign aid are admittedly vast in Bangladesh, claiming that the provision of financial support to the state that suffers a military and a political conflict is the ultimate […]
• Importance of Foreign Aid in Poverty Reducing Foreign aid is one of the methods used by wealthy nations to help reduce poverty in the least developed countries. Such countries as the US and Canada have provided financial aid to a number of […]
• Human Development. Role of Agriculture. Importance of Technology and Foreign Aid in Mozambique The access to wage labor, which enhances the state of agriculture and the whole country, depends on the people’s education. The rapid development of the agriculture is connected with foreign investments and earnings, as they […]
• Why Foreign Aid Doesn’t Work As an effect, the reason as to why Foreign aid has failed is because its main objective has been ignored, and it is not being assessed in light of industrialization and advancement in agricultural.
• United States Foreign Aid in Perspective The American foreign aid is one of the instruments used to extend American dominance in the world. Consequently, the fall of the USSR reduced the American funding in the third world.
• Foreign Aid and African Exporters: Help or Harm
• Foreign Aid and Economic Growth in Cameroon: Evidence From Cointegration Tests
• America Must Provide Foreign Aid to Poor Countries
• Donor Strategy Under the Fungibility of Foreign Aid
• Assessing Foreign Aid’s Long-Run Contribution to Growth and Development
• Australia’s Foreign Aid Dilemma: Humanitarian Aspirations Confront Democratic Legitimacy
• Making Foreign Aid More Efficient in Putting Into Place the Development Fundamentals
• How Important Is Aid Effectiveness to People for Choosing Countries to Support
• Linking Blockchain Technology and the Governance of Foreign Aid
• Reasons Why Britain Should Not Give Foreign Aid
• Bureaucratic Incentives, Path Dependence, and Foreign Aid: Irrigation in the Philippines
• Cambodia’s Patient Zero: The Political Economy of Foreign Aid and Avian Influenza
• Canada Should Change Policies on Peacekeeping, Foreign Aid, and Free Trade
• Foreign Aid and Aid Policy Effectiveness on Economic Growth of Ghana
• Capital Mobility, Foreign Aid, and Openness: Evidence From Sub-Saharan Africa
• China’s and Japan’s Foreign Aid Policies Vis-à-Vis Lusophone Africa
• Collusion Among Interest Groups: Foreign Aid and Rent-Dissipation
• Coming Into Money: The Impact of Foreign Aid on Leader Survival
• Company Interests and Foreign Aid Policy: Playing Donors Out Against Each Other
• Japan’s Foreign Aid Sanctions Policy After the End of the Cold War
• Donors and Domestic Politics: Political Influences on Foreign Aid Effort
• Comparing Taiwan’s Foreign Aid to Japan, South Korea, and DAC
• Competition for Export Markets and the Allocation of Foreign Aid
• Conditional Linkages Between Iron Ore Exports, Foreign Aid, and Terrorism
• Linking Corruption, Foreign Aid, and Welfare to the Poor
• Relations Between Decentralization and Foreign Aid Effectiveness
• Foreign Aid and Conditions Precedent: Political and Bureaucratic Dimensions
• Deterring Emigration With Foreign Aid: Overview of Evidence From Low-Income Countries
• Development Strategies and Foreign Aid Policies for Low-Income Countries
• Foreign Aid and Its Environmental Implication in India
• Diamonds, Foreign Aid, and Uncertain Prospects for Post-conflict Reconstruction in Sierra Leone
• Donor Preferences and Recipient Fiscal Behavior: Simultaneous Analysis of Foreign Aid
• Economic Development and the Effectiveness of Foreign Aid: A Historical Perspective
• Effective Foreign Aid, Economic Integration and Subsidiarity: Lessons From Europe
• Foreign Aid and Domestic Savings: The Crowding Out Effect
• Ethnicity, Foreign Aid, and Economic Growth in Sub-Saharan Africa: Kenya Case
• Explaining the Nepalese Trade Deficit: Foreign Aid or Stagnant Agriculture
• Federal Budget Cuts for Domestic Programs and Foreign Aid
• Financing Growth: Foreign Aid vs. Foreign Loans
• Foreign Aid Agreements With North Korea: Proposal to the United Nations
• Are Debt Repayment Incentives Undermined by Foreign Aid?
• What Are the Advantages of Foreign Aid?
• Does Foreign Aid Work or Does It Only Help the Rich Country?
• Has Foreign Aid Been Effective in the Water Supply and Sanitation Sector?
• Why Do Countries Depend on Foreign Aid?
• Does Foreign Aid Help Donor Countries More Than the Recipients?
• What Are the Types and Purposes of Foreign Aid?
• How Significant and Effective Has Foreign Aid to Indonesia Been?
• Are Democratizing Countries ‘Rewarded’ With Higher Levels of Foreign Aid?
• What Is the Difference Between Foreign Aid and Foreign Direct Investment?
• Are Foreign Aid and Remittance Inflows a Hedge Against Food Price Shocks in Developing Countries?
• Does Foreign Aid Accelerate Economic Growth?
• What Are the Pros of Foreign Aid in the US?
• Can Foreign Aid Create an Incentive for Good Governance?
• Does Foreign Aid Cause the Adoption of Harmful Economic Policies?
• Can Foreign Aid Dampen the Threat of Terrorism to International Trade?
• How Does Foreign Aid Affect the Economy?
• What Are the Potential Benefits of Foreign Aid to Developing Countries?
• Can Foreign Aid Motivate Institutional Reform?
• Does Foreign Aid Increase Foreign Direct Investment?
• Why Was It Important for the United States to Get Foreign Aid During the Revolution?
• Can Foreign Aid Reduce Income Inequality and Poverty?
• Why Does the United States Use Foreign Aid?
• How Important Was Foreign Aid in Henry VII’s Seizure of the English Throne?
• Does Foreign Aid Promote Economic Growth in Sudan?
• Who Is the Largest Provider of Foreign Aid?
• Has the Foreign Aid Carried on the Best Course of Action in the Sub-Saharan Region?
• Which Country Has the Best Foreign Financial Aid?
• Does Foreign Aid Reduce Energy and Carbon Intensities of Developing Economies?
• Why Can Corrupt Governments Receive More Foreign Aid?
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Recent IELTS Essay Question: International Aid

This essay question was reported on March 21st. Below is the essay question and ideas to help you write about both sides.

Some people think that famous people’s support towards international aids organisations draws attention to problems, while others think that celebrities make the problems less important. Discuss both sides and give your opinion.

Ideas for and against the involvement of famous people’s involvement in aid work:

Support for famous people’s involvement

• Famous people draw media attention wherever they go which helps to highlight the aid organisation and the problem.
• Take Princess Diana as an illustration, she championed the problem of land mines and brought enormous international attention to an otherwise forgotten problem.
• Celebrities are able to bridge the gap between a tragedy that has occurred in a distant place and bring it into people’s sitting rooms, making the problem seem more real and less remote.
• Famous people’s words often have more reach and more global identity. They are able to influence people in different countries and cultures all over the world.
• People are more likely to give donations when they are called to action by their favourite actor or football star. Fans follow the work of their favourite stars and like to get involved in whatever they are doing.
• Famous voices calling people to action have more power and influence than someone the public have never heard of. In other words, a familiar voice is often more trustworthy and more compelling.

Against famous people’s involvement

• More media attention may be given to the famous person’s involvement than the actual aid organisation and can draw attention away from the problem itself.
• Celebrity involvement can make the message shallow coming from a famous star who does not directly work with the charity.
• Using famous people to draw attention to particular global problems helps to promote world inequality which should be avoided.
• If the famous person’s image is damaged in the media for any particular reason, it could have repercussions on the charity and the problem. This means the charity becomes dependent on the famous person maintaining popularity which cannot always be guaranteed.
• Some people may be put off the aid organisations if they do not like that particular famous person.
• People may lose interest in a charity if the famous person stops their involvement.

Please note that these ideas must be adapted so that they connect directly with the issues in the essay question. You should not copy these ideas word for word. Instead you should take these ideas, write them in your own words and apply them to the specific essay question.

All Essay Ideas for Writing Task 2

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Hi Liz, I just want help on this situation Essay. Honestly, I dont know how to start the second question. Do I need to add another paragraph for it or is it enough to include it in my conclusion part?

(Other people can help though)

As most people spend a major part of their adult life at work, job satisfaction is an important element of individual well being. What are the factors that contirbute to job satisfaction? — (this I have an idea) How realistic is the expectation of job satisfaction for all workers? — (this, I dont have any idea. Should I just include this in the conclusion part?)

Thanks for your help. This will really help me in my struggle with the writing tasks.

Hope to here from you.

Hey Liz! I think a word “Identify” is a verb but you used it as a noun in several essay idea plans, instead of identity. If I am wrong, could you please explain it?

Thanks. It’s just a typo. Let me know if you see it again. All the best Liz

Thank you Liz!

I just finished the ielts in a Sydney venue Task 1 Bar graph of recycling percentage between 1992 and 2002 for three different things (glass, paper, cans and I can’t remember the other one hahaha) Task 2 Some educators think that every student of hight school should be sent in a international exchange programs. Give your opinion, do you think that the advantages outweigh the drawbacks?

Thanks Liz for your help, I think that I did ok in writing, however reading was a bit difficult or maybe I found it more difficult because I focused to much on writing, well I will see 🙂 🙂

Thanks for sharing 🙂

Hi Ms. Liz!

You’re an incredible teacher! I passed the writing subtest finally despite that I only had 1 day reading the topic ideas for task 2. It really worked! Thanks a lot!!!! Continue sharing the blessing!

You’re welcome 🙂

Thanx so much mam..it’s very helpful for me..

Hi Liz, Can you please see my essay below and tell me what band score can I expect for this? Essay topic: Parents and teachers make many rules for children to encourage good behaviour and protect them from danger. However children would benefit from fewer rules and greater freedom. To what extent do you agree or disagree with the above statement? Give Reasons.

We often see families and teachers make numerous rules for kids to discipline them and safeguard them against dangers. In my opinion if children were granted more freedom and we made to follow lesser rules they may benefit from it more.

In my opinion, we should set examples in place of restrictions to encourage kids to behave better and be safe. Children tend to do things they are asked not to do. Hence, when we impose rules on them, they either out of their natural instinct to disagree or out of curiosity want to do just the opposite. Especially teenagers while growing up like to be rebellious and think it is fun to break rules.

I also think that when we set too many guidelines we do not allow the child to make decisions and understand the rationale behind them. In the process we also distance them from ourselves. I feel children should be make aware of results of bad behaviour. By doing this we encourage kids to make more responsible decisions which are well thought through.

Children also do, not what they are told but, what they are shown. Instead of telling them how and what needs to be done or not done, if parents and teachers illustrate ideal behaviour in various situations, kids will emulate them. If a child is not given greater freedom, they would always have some amount of insecurity and may also feel suffocated and untrusted. Such kids may also not develop confidence to deal with situations independently.

Overall, I feel that parents and teachers should provide children more encouragement to children to make their own decisions – small and big. They should practice instead of preaching so that kids look up to them and learn. I feel kids would prosper more in an environment where they have lesser rules and more freedom.

Please see my notice about posting writing: https://ieltsliz.com/posting-writing/ Thanks Liz

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How effective is foreign aid?

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Stay up to date:, economic progress.

Foreign aid is controversial in development economics. Three distinct camps may be distinguished:

• One believes that official assistance is ineffective, and has harmed poor countries throughout the years.

This views official aid as creating dependency, fostering corruption, and encouraging currency overvaluation (Easterly 2014 and Moyo 2010). It also prevents countries from taking advantage of the opportunities provided by the global economy.

• Another camp believes that aid levels have been too low, and that large increases would help reduce poverty.

This camp, however, believes we need a rethinking on the way in which aid is provided (Sachs 2009 and Stiglitz 2002). In particular, specific interventions, such as anti-malaria programmes, should be emphasised.

• The third camp is less vocal, and includes authors such as Collier (2007), who has emphasised the role of a number of ‘traps’ in perpetuating destitution, and Banerjee and Duflo (2011) who argue that the use of ‘randomised control trials’ may help devise effective and specific aid programmes in the war against poverty and underdevelopment.[1]

These schools of thought have historical precedents.

Foreign aid policies from a historical perspective

Foreign aid is a relatively new concept in economics. The classics – Smith, Ricardo, and Stuart Mill, for example – didn’t address the subject in any significant way. If anything, classical economists thought that the colonies would catch up – and even surpass – the home country quite rapidly.[2] In Chapter VII of The Wealth of Nations, Adam Smith provides a detailed discussion on the “causes of the prosperity of the new colonies.”[3]

The first legal statute dealing expressly with official aid was passed by Parliament in the UK in 1929.[4] In 1940 and 1945, new laws dealing with aid to the colonies were passed in the UK. These Acts increased the amount of funds available, and made commitments for longer periods of time – for up to ten years in the Colonial Development and Welfare Act of 1945. More important, the Act of 1945 established that aid plans had to be prepared “in consultation with representatives of the local population.”[5]

In the US the first law dealing with foreign assistance came quite late, with the adoption of the Marshall Plan in 1948.[6] In his inaugural speech on 20 January 1949 – the so-called ‘Four Point Speech’ – President Harry Truman put forward, for the first time, the idea that aid to poor nations was an important component of US foreign policy. He said that one of the goals of his administration would be to foster “growth of underdeveloped areas.”[7]

In spite of Truman’s vehement allocution, aid commitments to poor countries were considered temporary. In 1953, when Congress extended the Mutual Security Act, it explicitly stated that economic aid to US allies would end in two years; military aid was to come to a halt in three years.

In the early 1960s – and largely as a result of the escalation of the Cold War – the US revised its posture regarding bilateral assistance, and, jointly with other advanced countries, founded the Development Assistance Committee (DAC) at the newly formed Organisation for Economic Cooperation and Development (OECD). The main objective of the DAC was – and continues to be – to coordinate aid to the poorest countries.[8]

Foreign aid policies and academics’ views on development

Academic research has helped shape international aid policies. During the 1950s and 1960s, aid agencies’ work was influenced by the Harrod–Domar growth model and by W. Arthur Lewis’ unlimited supplies of labour model. As a result, most agencies funded very large capital-intensive projects, and neglected policies, projects, and programmes related to labour, human capital, and productivity.

This changed in the late 1960s and 1970s with the ascendance of Solow’s neoclassical model of growth, and the development of the ‘basic needs’ approach to welfare economics. Aid policies changed focus, and a higher percentage of funds were devoted to social programmes (health and education), programmes aimed at directly reducing poverty, and programmes that strengthened skills and human capital.

Further changes in aid policy came with research that related openness and exports’ expansion to productivity growth. The work of Anne Krueger and Jagdish Bhagwati was particularly important. During the 1980s and 1990s, international assistance became increasingly conditioned on the recipient countries liberalising their economies through the elimination of quantitative import restrictions and the lowering of import tariffs.

The development of the ‘dependent economy’ macroeconomic model, with tradable and nontradable goods, in the late 1970s and early 1980s, helped put emphasis on the crucial role of the real exchange rate in the resource allocation process. Works by Robert Mundell, Rudi Dornbusch, and others pointed out that real exchange rate overvaluation was costly and at the heart of devastating currency crises. These works, in conjunction with research undertaken by Robert Bates and Elliot Berg, among others, influenced aid agencies’ views regarding currencies, incentives, exports, and agriculture. The very poor performance of the agricultural sector between 1965 and 1985 in most regions – and in particular in Africa – also affected thinking in the aid agencies, and contributed to a new view that emphasised ‘getting prices right’.

In the 1990s, two research lines influenced aid policy.

• Work on incentive compatibility and strategic behaviour persuaded aid officials in donor countries to become more flexible, and to incorporate recipient governments in the design and management of aid programmes.

This approach received the name of ‘programme ownership’, and has been at the heart of improved relations between donors and poor nations in the last two decades.

• New research on capital mobility and the international transmission of crises, resulted in a more nuanced and pragmatic view regarding the use of capital controls.

Many agencies – including the IMF and the World Bank – supported a limited use of capital controls (especially controls on capital inflows) and so-called macro-prudential regulations, as a way of avoiding destabilising forces and currency crises.

Econometric studies

Academic and aid-community economists have used a battery of econometric methods to analyse whether aid is effective in the sense of generating higher growth and better economic outcomes.[9] Some of these studies have tried to tackle issues of reverse causality, and have used a series of instruments – some more convincing than others – in an attempt to deal with the fact that slower growth (in very poor countries) may attract additional aid.

Some research focused on whether aid only works under certain conditions, or whether a minimal degree of institutional development is required for international assistance to bear fruit (Burnside and Dollar 2000, 2004). Many of these studies have considered nonlinear functional forms, and have investigated if there are meaningful interactions between aid and other variables, such as the degree of literacy, the level of corruption, the extent of macroeconomic stability, institutional strength, the quality of overall economic policies, and geography.

In general, most studies have relied on cross-country or panel data, and have attempted to distinguish between short- and long-term impacts. A number of authors have used ‘Dutch disease’-related models to analyse the extent to which increased aid results in currency overvaluation, poor exports performance, and crises – see Rajan and Subramanian (2011).

Fragile and inconclusive results

Overall, the results from this large body of research have been fragile and inconclusive.

After analysing 97 studies, Doucouliagos and Paldam (2008, 2009) concluded that, in the best of cases, it was possible to say that there was a small positive, and yet statistically insignificant, relationship between official aid and growth.

This conclusion was also reached by Rajan and Subramanian (2008) in an analysis that corrected for potential endogeneity problems, and that considered a comprehensive number of covariates. In particular, according to this study there is no clear relation running from more aid to faster growth; this is true even in countries with better policy environment and stronger institutions – see also Rajan and Subramanian (2008) and Quibria (2014).

Bourguignon and Sundberg (2007) have argued that one should not be surprised by the inconclusiveness of studies that rely on aggregate data.

According to them, aid affects economic performance, directly and indirectly, through a variety of channels. Treating all aid as homogeneous – independently of whether it is emergency assistance, programme aid, or project-based aid – is misleading. In their view it is necessary to break open the ‘black box’ of international aid, and deconstruct the causality chain that goes, in intricate and non-obvious ways, from aid to policymakers, to policies, and to country outcomes. This type of analysis would explore a number of specific ways in which international assistance could impact economic performance. In particular, according to Bourguignon and Sundberg (2007) it is important that studies that try to determine the impact of aid on growth consider issues related to technical assistance, conditionality, level of understanding of the economy in question, and the government’s ability to implement specific policies.[10]

Bitter policy controversy

In spite of its intensity, the academic debate pales in comparison with recent policy controversies on the subject. The level of animosity in this veritable war of ideas is illustrated by the following quote from an article by Jeffrey Sachs published in 2009:

“Moyo’s views [are] cruel and mistaken… [Moyo and Easterly are] trying to pull up the ladder for those still left behind.”[11]

Easterly’s reply, also from 2009, was equally strong:

“Jeffrey Sachs [is]… the world’s leading apologist and fund-raiser for the aid establishment… Sachs suffers from [an]… acute shortage of truthiness…”[12]

The Easterly–Sachs debate has generated public attention because it has been couched in rather simple terms. These are simple narratives based on ethnographic arguments that resonate with large segments of the general public. But behind the different positions there are hundreds of academic studies – most of them based on advanced econometric techniques – that have tried to determine the extent to which foreign aid is effective. The problem, as noted, is that much of this body of empirical work has resulted in fragile and inconclusive evidence.

Intermediate positions

For an increasing number of economists, the issue of aid effectiveness is neither black nor white. Indeed, a number of authors have taken intermediate positions. For example, in an influential book that deals with the plight of the poorest of the poor, Collier (2009) has argued that both critics and staunch supporters of official aid have greatly exaggerated their claims and distorted the empirical and historical records.

Collier’s reading of the evidence is that over the last 30 years official assistance has helped accelerate GDP growth among the poorest nations in the world – most of them in Africa – by approximately 1% per year. This is a nontrivial figure, especially when one considers that during this period the poorest countries have had an aggregate rate of per capita growth of zero. That is, in the absence of official assistance, the billion people that live in these nations – the so-called ‘bottom billion’ – would have seen their incomes retrogress year after year.

Banerjee and Duflo (2011) argue that there is need for a “radical rethinking of the way to fight poverty.” In their view, the acrimonious debate between the Easterly and Sachs factions has missed the boat. Banerjee and Duflo join a growing group of researchers in arguing that this controversy cannot be solved in the abstract, by using aggregate data and cross-country regressions. The evidence, in their view, is quite simple – some projects financed by official aid work and are effective in reducing poverty and moving the domestic populations towards self-sufficiency and prosperity, while other projects (and programmes) fail miserably. The question is not how aggregate aid programmes have fared in the past, but how to evaluate whether specific programmes are effective.

Persuasive ‘aid narratives’

In Edwards (2014b) I discuss the effectiveness-of-aid literature from a historical perspective, and I argue that international aid affects recipient economies in extremely complex ways and through multiple and changing channels. Moreover, this is a two-way relationship – aid agencies influence policies, and the reality in the recipient country affects the actions of aid agencies. This relationship is so intricate and time-dependent that it is not amenable to being captured by cross-country or panel regressions; in fact, even sophisticated specifications with multiple breakpoints and nonlinearities are unlikely to explain the inner workings of the aid–performance connection.

Bourguignon and Sundberg (2007) have pointed out that there is a need to go beyond econometrics, and to break open the ‘black box’ of development aid. I would go even further, and argue that we need to realise that there is a multiplicity of black boxes. Or, to put it differently, that the black box is highly elastic and keeps changing through time. Breaking these boxes open and understanding why aid works some times and not others, and why some projects are successful while other are disasters, requires analysing in great detail specific country episodes. If we want to truly understand the convoluted ways in which official aid affects different economic outcomes, we need to plunge into archives, analyse data in detail, carefully look for counterfactuals, understand the temperament of the major players, and take into account historical circumstances. This is a difficult subject that requires detective-like work.

Banerjee, A and E Duflo (2011), Poor Economics: A Radical Rethinking of The Way to Fight Global Poverty, New York: Public Affairs.

Barder, O (2005), “Reforming Development Assistance: Lessons from the UK Experience”, Center for Global Development Working Paper 70.

Bates, R (1981), Markets and States in Tropical Africa: The Political Basis of Agricultural Policies, 2nd edition from 2005, Berkeley: University of California Press.

Bhagwati, J (1978), Anatomy and Consequences of Exchange Control Regimes, Cambridge, MA: Ballinger.

Bourguignon, F and M Sundberg (2007), “Aid Effectiveness: Opening the Black Box”, American Economic Review 97(2): 316–321.

Burnside, C and D Dollar (2000), “Aid, policies, and growth”, American Economic Review: 847–868.

Burnside, C and D Dollar (2004), “Aid, policies, and growth: reply”, American Economic Review: 781–784.

Collier, P (2007), The Bottom Billion: Why the Poorest Countries are Failing and What Can Be Done About It, Oxford: Oxford University Press.

Doucouliagos, H and M Paldam (2008), “Aid effectiveness on growth: A meta study”, European Journal of Political Economy 24(1): 1–24.

Doucouliagos, H and M Paldam (2009), “The aid effectiveness literature: The sad results of 40 years of research”, Journal of Economic Surveys 23(3): 433–461.

Easterly, W (2009), “ Sachs Ironies: Why Critics are Better for Foreign Aid than Apologists ”, Huffington Post, 25 May.

Easterly, W (2014), The tyranny of experts: Economists, dictators, and the forgotten rights of the poor, Basic Books.

Edwards, S (2014a), Toxic Aid: Economic Collapse and Recovery in Tanzania, Oxford: Oxford University Press.

Edwards, S (2014b), “Economic Development and the Effectiveness of Foreign Aid: A Historical Perspective”, NBER Working Paper 20685.

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[1] For a detailed discussion of these issues see Edwards (2014b).

[2] The analysis in this section doesn’t pretend to be exhaustive. I don’t attempt to deal with every aspect of aid-related controversies. Readers interested in the intricacies of international assistance may consult some of the very thorough surveys on the subject, including two comprehensive articles by Radelet (2005, 2006) and Quibria (2014), and the extensive literature cited therein.

[3] In many ways this analysis is remarkably modern. Smith argues that the main reason why the English colonies of North America had done significantly better than the Spanish dominions of South America was that “the political institutions of the English colonies have been more favourable to the improvement and cultivation of this land than those of the [Spanish colonies].” Smith goes on to list a number of policies implemented by the British – including tax, inheritance, and trade policies – that, in his view, explain the economic success in what was to become the US; in parallel, he discusses how poor policies enacted by the Dutch and the Spanish – and to a lesser extent by the French – stifled growth and progress in their dominions. Although this chapter runs for almost 100 pages, there is not even a mild suggestion that the home nation should provide systematic financial assistance to its colonies.

[4] The Colonial Development Act created the Colonial Development Fund with resources of one million pounds sterling per year. Although this Act intended to improve the social conditions in the colonies – especially in the rural sector – its main objective was to promote British exports at a time when the overvaluation of the pound had greatly reduced British competitiveness. Until the passing of this legislation the colonies were supposed to be, largely, self-financing, and any aid was confined to emergencies.

[5] Barder (2005: 3), emphasis added.

[6] The Marshall Plan, which was announced by US Secretary of State George C. Marshall in a speech at Harvard University on 5 June 1947, played an important role in defining US policy towards foreign aid.

[7] He then added that “more than half the people of the world are living in conditions approaching misery… For the first time in history, humanity possesses the knowledge and the skill to relieve the suffering of these people.”

[8] In 1946 France created its first aid agency (FIDES), which in 1963 was replaced by the Ministry of Cooperation. The Nordic countries created their own aid agencies in 1962.

[9] See Guillaumont and Wagner (2014) and Quibria (2014) for comprehensive recent reviews. See, also, Johnson and Subramanian (2005), Rajan and Subramanian (2008), Collier and Dollar (2004), Bourgouignon and Saunders (2007), and Quibria (2014), and the literature cited therein. See Booth (2012) for a discussion on aid effectiveness and governance.

[10] See Quibria (2014) and Edwards (2014a, 2014b) for discussions of these issues.

[11] Sachs (2009).

[12] Easterly (2009, 2014).

Published in collaboration with VoxEU .

Author: Sebastian Edwards is the Henry Ford II Professor of International Economics at the University of California, Los Angeles.

Image: A Bozo fisherman casts his net from a pirogue in front of Saaya village in the Niger river inland delta February 7, 2007. REUTERS.

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34 The Politics of International Aid

Hristos Doucouliagos is Alfred Deakin Professor and Chair in Economics at Deakin University.

• Published: 11 February 2019
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This chapter surveys several aspects of the political economy of aid and the political economy of aid research. The first part reviews the politics of aid giving, with a specific focus on the use of aid to buy votes and aid allocated to recipients experiencing violent conflict. The survey then summarizes the literature on aid effectiveness on growth, capital accumulation, health, and education, and on institutions, and the links between aid and conflict. Finally, the survey explores the credibility of aid empirics, exploring issues of publication selection bias, heterogeneity, and statistical power. Direction for future research are outlined.

34.1 Introduction

All government activity involves some redistribution. In the case of international aid, this involves taxing donor nations and redistributing to recipient nations.* This is an inherently political process. Why do donors give aid? What are the effects of aid on recipient nations? An enormous theoretical and empirical literature has developed to understand the motives behind aid allocations and the potentially diverse effects of aid, which range from broad goals of generating economic growth, improving the quality of institutions, and reducing conflict, to specific objectives such as improved health and education. Theory states a wide range of possible effects of aid, from positive to negative outcomes and everything in between. Consequently, empirics are indispensable to assessing the impact of aid and the development of policies that increase aid effectiveness.

Aid comes in many forms. For example, it can be granted conditionally on achieving specific political, institutional, and policy reforms. Or, it may be allocated unconditionally and independently of the recipients’ policies and actions, with recipients free to expend aid in accordance with their own interests and objectives. Aid may be targeted, as in the case of aid given for specific health outcomes, or nontargeted, as in the case with general budget support.

Donor motives can range from altruistic to pragmatic. Altruistic donors may be genuinely concerned with the plight of the poor and attempt to improve conditions in recipient nations, directing aid to where it is likely to generate the largest benefits. However, this paves the way for the Samaritan’s dilemma, whereby aid from altruistic donors induces recipients to reduce their own effort ( Buchanan 1975 ). Alternatively, donors may allocate aid on the basis of political considerations—for example, to appease domestic constituencies, to buy votes at the United Nations, to complement foreign policy, or to use aid as an instrument to implement democratic reform or as part of counterinsurgency strategy. On the recipients’ side, politics enters into decisions as to where and how to distribute aid: On the basis of need or patronage? For health or for the military? To develop the judiciary or to buy-off elites? While recipients might share donors’ pursuit of development and poverty reduction, they often pursue other objectives and frequently find ways to redirect aid to uses other than development. Indeed, as rational actors, donors and recipients respond to incentives and their motives appear to be largely driven by self-interest and strategic considerations. In reality, motives vary between donors, within donors over time, and between recipients. Donors may be more altruistic toward certain recipients (e.g., former colonies) and more pragmatic toward others (e.g., as part of counterinsurgency). Moreover, stated donor motives often differ from actual motives. For example, constituents in donor countries may state that they want to redistribute to developing nations, but this may merely be expressive (Brennan and Lomansky 1993; Hillman 2010 ).

While aid funds private goods in recipient nations, it also funds important public goods and hence involves collective action ( Gibson et al. 2005 ). Aid also provides private benefits for donors ( Mascarenhas and Sandler 2006 ). The funding of public goods opens up free-riding opportunities among donors while private benefits provide incentives to give aid that inject donor-specific motives into the aid-allocation calculus ( Mascarenhas and Sandler 2006 ). Consequently, aid involves complex interactions between bilateral donor countries, multilateral organizations, recipients, and interest groups in both donor and recipient nations. To reflect this, the aid-allocation process can be modeled as a Stackelberg game, whereby strategically motivated donors are leaders or where altruistic donors sequentially follow recipient leaders (see Pedersen 2001 ). 1 Alternatively, aid may be viewed as a noncooperative Nash-Cournot equilibrium, whereby donors make their allocations simultaneously according to their own objectives and without coordinating with other donors. In contrast, stated policies increasingly call for cooperation and coordination in aid allocations among donors. 2

This is not an easy area to evaluate. Both the aid-allocation process and the outcomes from development aid emerge in complex situations, are estimated with imperfect data, and involve imperfect techniques—for example, poor instruments for aid to accommodate endogeneity in econometric studies. Furthermore, empirical investigations are carried out by researchers, some of whom are influenced by their own priors and self-interests, some who are seeking to report favorable aid effects, and others who have a preference for adverse effects. It is thus easy to understand how a reader of just about any part of the aid literature may well be lost in the sea of conflicting propositions and empirical findings.

The aid literature is immense, and it is impossible to do justice to it in any single survey. Accordingly, the aim of this attempt is to provide an overview of several aspects of the political economy of aid, as well as the political economy of aid research. The survey is structured into three sections: aid giving, aid effectiveness, and aid research. The politics of aid giving is surveyed in section 34.2 , with a specific focus on the use of aid to buy votes, and aid allocated to recipients experiencing violent conflict. The politics of aid effectiveness is surveyed in sections 34.3 , 34.4 , and 34.5 : Section 34.3 presents a summary of the literature on aid effectiveness on growth, followed by a summary of the effect of aid on institutions in section 34.4 , while section 34.5 explores the links between aid and conflict. Just as aid is a political process, so too is research on aid. Accordingly, section 34.6 surveys the politics of research on aid, exploring the credibility of the empirics. Throughout the survey, an attempt is made to assess the weight of the evidence. Hence, where possible, this survey relies on meta-regression analysis, as this technique offers an efficient way of assessing the evidence base and drawing reliable statistical inferences ( Stanley and Doucouliagos 2012 ).

34.2 The Politics of Aid Giving

Why do nations donate aid? This central question occupies a large research effort to identify the motives for aid giving and, indeed, aid receiving. Studies range from interviews with policymakers and analysis of stated official policy positions, to econometric studies that let the data, rather than the politicians and bureaucrats, speak. A very large list of factors have been explored. Table 34.1 lists the main allocation criteria identified in the literature: the key socioeconomic and humanitarian motives are in column 1; the key political motives, some of which relate to rewarding recipients for their good behavior are in column 2; and the more economic and strategic self-interested orientated motives are in column 3. The categories are loose, as several motives can be classified in different ways. They can be more broadly classified as reflecting recipient needs and donor interests. 3

If aid is given for considerations other than income and growth, then there is less reason to expect aid on growth effectiveness; any growth effects might be incidental rather than deliberate policy. Nevertheless, the motives listed in table 34.1 are not mutually exclusive. For example, donors may well allocate aid to stimulate growth in the recipient nation and use this growth to further donors’ trade interests. Similarly, fighting terror and meeting donors’ strategic security interests are complementary motives. Such approaches have much to commend them; mutual gains from trade is a fundamental principle of commerce.

In many circles, it is hoped that donors act out of pure altruism. However, there is little reason to believe that donors are purely altruistic. Decades of public-choice and political-economy research provides solid evidence that this is unlikely to be the norm. Nevertheless, even if donors were altruistic, recipient behavior need not facilitate growth. Altruistic donors and social-welfare-maximizing recipients are exceptionally rare phenomena. All governments have the power to take ( Brennan and Buchanan 2000 ). In donors, this is the power to tax citizens. In recipients, this also includes the power to tax aid. While donors often try to impose conditions, there is no ironclad guarantee that recipient states will use the funds as donors intend. As Brennan and Buchanan (2000 , 11) note, the power to tax “does not carry with it any obligation to use the tax revenue raised in any particular way.” 4

Donors may, of course, use several criteria to allocate aid, and motives may very well change over time and also differ from region to region. Donor domestic politics play an instrumental role. For example, donor-government ideology can be influential in aid allocation decisions ( Milner and Tingley 2010 ; Brech and Potrafke 2014 ), as can ethnic lobby groups (Lahiri and Raimondos-Moller 2000). The simplest allocation mechanism is to allocate aid based on past allocations. This results in aid inertia. This has the advantage of providing stable aid flows, which is advantageous because aid volatility may harm development aid effectiveness. Another factor is strategic interactions. Many government decisions are not made in isolation. Rival jurisdictions compete and compare their actions against others. For example, strategic interactions can result in the “bandwagon” effect in aid allocations, whereby donors give funds to recipients that other donors are targeting.

There is insufficient information on some of the allocations. For example, the literature explores commercial motives, finding that debt, foreign direct investment (FDI), and trade are important considerations for giving aid. Whether these factors actually foster trade and FDI remains unclear. We also do not know enough about potential conflict between motives, how motives evolve over time, and the factors that cause donors to change priorities.

Donor coordination has the potential to improve aid effectiveness (see Bigsten and Tengstam 2015 ). Unfortunately, there are relatively few empirical investigations on the nature of the game between donors and recipients and the degree of cooperation between donors. A notable exception is Mascarenhas and Sandler (2006) , who analyze aid allocations for 15 Development Assistance Committee (DAC) donors and find that donors do not act cooperatively. More recently, Annen and Moers (2017) find that donors compete for aid impact, and this leads to aid fragmentation; they conclude that donor strategic interactions make donor coordination “doomed to failure.”

The focus of the remainder of this section is on the use of aid to buy votes and political support and the use of aid to reduce conflict.

34.2.1 Does Aid Buy Political Support?

An important line of research investigates self-interested political motives—specifically, whether aid is used to buy political support. That is, aid may be used as a means of soliciting the cooperation of the recipient in a range of arenas. This may, indeed, be one reason why aid has been ineffective in generating growth (see section 34.3 ); while a stated goal may be to reduce poverty, its real aim, at least in some instances, might be to buy political support. Political motives are difficult to test empirically. However, an informative line of inquiry has been to investigate United Nations voting.

There are basically two sets of studies. First, there are aid-allocation studies that include a variable such as UN voting as an explanatory variable. An example of this group of studies is Alesina and Dollar (2000) . Such studies show that political factors are important for aid allocation, but do not provide evidence that aid actually buys votes. A second group of studies investigates the direct effect of aid allocations on voting. For example, Wang (1999) analyzes data for 65 developing countries for the period 1984 to 1993, and finds that U.S. aid influences UN votes on important decisions. Kuziemko and Werker (2006) analyze United Nations Security Council membership for the periods 1946 to 2001 and 1960 to 2001. They find that U.S. aid buys votes of rotating (temporary) members. Similarly, Dreher et al. (2009) find that World Bank lending is used to influence United Nations Security Council elected members. Dreher et al. (2008b) analyze United Nations General Assembly voting for 143 countries for the period 1973 to 2002, and find that the United States uses aid to buy votes. Dreher and Sturm (2012) find that during the 1970–2008 period, World Bank and International Monetary Fund (IMF) loan recipients voted in line with the average G7 country in the United Nations General Assembly. 5

These studies suggest aid effectiveness: aid can and is used as an instrument for political objectives. Vote buying has been observed with respect to voting in the UN General Assembly, the UN Security Council, the UN elections, and organizations such as the International Whaling Commission, among others (see Lockwood 2013 ). Lockwood (2013) notes that while vote buying or vote trading are illegal under national laws, they are not illegal under international law. 6

34.2.2 Does Aid Flow to Conflict Zones?

An emerging area of research is whether aid is given to conflict areas, either to assist with reducing conflict, as a response to needs arising from conflict, or to assist with post-conflict reconstruction. Many studies have found that colonial legacy and military alliances are important determinants of the amount of aid received. Several studies have also investigated whether conflict is a determinant of aid. For example, analyzing the period 1998 to 2005, Moss et al. (2005) find no change in U.S. aid allocations in response to the War on Terror. Fleck and Kilby (2010) also analyze U.S. aid, but they find more aid allocated during the War on Terror. Dreher and Fuchs (2011) broaden the analysis to DAC donors for the period 1971 to 2008 and find that more aid flows to countries that face terrorism. Kisangani and Pickering (2015) also investigate DAC donors, for the period 1960 to 2004. They find that aid increases when DAC members engage in conflict.

34.3 The Politics of Aid Effectiveness on Growth

Most empirical studies on aid effectiveness have focused on the impact of total aid on generating growth and increasing incomes. This is understandable, given data availability on aggregate aid and incomes. Moreover, reducing poverty is an oft-stated donor objective. While other motives have emerged—for example, aid to tackle climate change, and aid to attain social objectives such as gender equality—economic considerations continue to take center stage.

34.3.1 Theory

Aid can stimulate growth if it directly augments savings, investment in vital plant and infrastructure, human capital accumulation, and technology. Apart from the direct transfer of funds, aid may also help connect recipients with donors and other nations, fostering the transfer of ideas and the thirst for reform. Growth generated by aid in one region could also spill over to others ( Askarov and Doucouliagos, 2015a ). For example, donors may learn from their experience in one nation, and this knowledge is used to enhance aid effectiveness elsewhere. Aid might also stimulate growth, technology, and foreign-investment spillovers.

Aid could, however, unintentionally be detrimental to growth. This would arise, for example, if aid adversely affects the quality of institutions (see section 34.4 ), inflames conflict (see section 34.5 ), or if it leads to rent-seeking contests that detract resources from growth-generating activities.

34.3.2 Empirics

The econometric literature provides two sets of estimates of aid effectiveness on growth. The largest group of studies reports reduced-form growth regressions, where the dependent variable is per capita growth (or income per capita in some studies) and the key variable of interest is aid. Some of these studies explore various conditioning factors, where aid is interacted with other variables (e.g., good policy or conflict) or with itself (to explore nonlinear effects). A second group of studies provides direct estimates of aid on factor accumulation, where the dependent variable is savings, investment, education, or health, and again the key variable of interest is aid.

There are numerous data, measurement, specification, and estimation issues that plague the empirical literature. Measurement errors can lead to attenuation bias. There is the issue of which measure of aid should be used: the value of aid, aid as a share of GDP, or aid per capita? And, which type of aid should be investigated? Total aid or only aid that can be expected to create growth ( Clemens et al. 2012 ). Moreover, aid might be endogenous to growth—for example, donors may prefer to allocate aid to regions that are growing faster, as this creates more successful projects. Dealing with this issue is not easy. Recent attempts at different identification strategies include Rajan and Subramanian (2008) , Clemens et al. (2012) , Brückner (2013), and Dreher and Langlotz (2015) . The contributions of these studies notwithstanding, an adequate identification strategy remains a major challenge in evaluating aid effectiveness. In addition, it is important to note that the average study is underpowered. That is, the typical growth regression lacks adequate statistical power to find an effect where one exists ( Ioannidis et al. 2017 ). Panel data increase sample size and hence statistical power, but this risks introducing heterogeneity as additional countries are added to samples. The trade-off between statistical power and sample homogeneity, and hence a generalization of results, has not been fully addressed in the aid literature. In any case, even panel data studies are underpowered (see section 34.6 ).

34.3.2.1 Aid on Growth

Most studies of aid effectiveness estimate reduced-form growth regressions, where growth is directly regressed on aid conditional on a set of other variables. In their meta-analysis of 68 econometrics studies with 543 comparable estimates of aid effectiveness, Doucouliagos and Paldam ( 2008 , 2009 ) conclude that aid has not generated growth, on average. Mekasha and Tarp (2013) recently revisited this meta-study and conclude that aid has a positive effect on growth. Mekasha and Tarp, however, use random-effects weights, which are known to be biased and inflate weighted averages in the presence of publication bias ( Stanley and Doucouliagos 2015 ). 7 Publication bias has been detected in this literature; see section 34.6 . Doucouliagos and Paldam (2015) updated their earlier study to include 141 studies with 1,777 estimates. After expanding their earlier sample by a factor of 3, they reach the same conclusion of aid ineffectiveness; the large aid-effectiveness literature has failed to establish that aid has realized its primary stated objective of generating growth and income.

Not only does aid not generate growth but Doucouliagos and Paldam (2009) show declining aid effectiveness over time, consistent with aid agencies’ “unlearning by doing.” One response to this is that aid agencies first picked the low-hanging fruit and, consequently, it has become harder for aid to generate growth. An equally plausible explanation is offered by the publication-bias and declining-effects literatures ( Doucouliagos and Paldam 2015 ). Specifically, the earlier empirical studies may have selectively reported larger effects. The subsequent literature corrects the research record, resulting in the appearance of a decline in aid effectiveness. A second response is to argue that aid didn’t generate growth in the past but it does now—for example, now that the Cold War is over. Doucouliagos and Paldam (2015) investigate this idea directly and dispel it, concluding that the new evidence does not establish that aid effectiveness has improved. Rather, any change in reported aid effectiveness is probably an outcome of publication selection bias. A third response is that aid does not generate growth because that is not its main intent. Rather, aid is directed toward civil society, developing institutions, fighting conflict, and the like. Hence, according to this argument, aid effectiveness should be assessed in terms of these objectives and not in terms of growth. Some of these alternate outcomes are surveyed in sections 34.4 and 34.5 .

34.3.2.2 Aid on Factor Accumulation

Reduced-form growth regressions offer few insights on the channels through which aid might affect growth. Accordingly, attention has also been directed to identifying potential channels, with the key contenders being physical and human capital accumulation.

Savings and investment : International aid can fuel growth by supplementing domestic savings. Similarly, aid contributes to growth when it is invested and increases capital. Doucouliagos and Paldam (2006) conducted meta-analyses of the effectiveness of aid on savings and the effectiveness of aid on investment. Drawing upon the findings of 24 studies on savings with 89 comparable estimates, and 29 studies on investment with 133 comparable estimates, they conclude that only about a quarter of the aid is invested; it appears that the remainder crowds-out domestic savings principally through increased public-sector consumption. Hence, aid has a limited impact on capital accumulation.

Health : Aid can contribute to human capital through education and improved health outcomes. Both education and health contribute to growth; the effects of education on growth are more long term, while health improvements for people of working age are likely to make a more immediate contribution to growth. Nevertheless, both health and education are also important social objectives; even if they don’t contribute to growth, they can profoundly improve human welfare.

A recent meta-analysis of 65 econometric studies of health spending and health outcomes confirms that public spending on health reduces mortality, with an elasticity of about −0.13 (see Gallet and Doucouliagos 2017 ). Levine (2007) presents numerous case studies of successful public-health interventions, some funded by aid. Hence, aid spending on health has the potential to contribute to health outcomes.

Empirical investigations of aid effectiveness on health face many of the same issues as aid and growth. There is the recurring issue of whether aid for health might also be fungible; aid is given to attain health outcomes, but at least some of the funds end up elsewhere. For example, Lu et al. (2010) report that recipient governments substitute health aid for their own spending on health. See also Dieleman and Hanlon (2014) and studies cited therein. Needless to say, if international aid displaces domestic health spending, then it will be less effective than donors intended. Another consideration is that a key factor in aid effectiveness is whether politics in recipient nations makes health a priority. This is often not the case. Finally, endogeneity remains as much of an issue here as it is in the growth-effectiveness literature ( Hsiao and Emdin 2015 ).

The literature on health is, of course, enormous. However, only a relatively small number of studies investigate the direct links between aid and health outcomes. “Health” is a general term. It is probably more meaningful to focus on more specific health outcomes—for example, mortality of infants, life expectancy of the elderly, or certain medical conditions.

There are also direct and indirect channels through which aid can influence health. Mishra and Newhouse (2009) cite several studies that show that health improvements do not necessarily require growth. Hence, even if aid does not generate growth, this does not preclude aid affecting health through other channels. For example, there is some evidence that institutions matter for health outcomes (e.g., Besley and Kudamatsu 2006 ), but as discussed in section 34.4 , aid probably does not improve institutions and, hence, aid is not likely to influence health through this channel.

One of the first empirical studies was Williamson (2008) , who finds that aid did not improve health outcomes for 208 countries in the period 1973 to 2004. In contrast, Mishra and Newhouse (2009) analyzed data for 118 countries for the period 1970 to 2004 and find a positive effect of health aid on infant mortality, but no effect on health from total aid. Chauvet et al. (2013) also find that health aid reduces infant mortality, though their results are not robust. Furthermore, in contrast to aid, Chauvet et al. (2013) report a robust finding that private remittances reduce mortality.

Some studies have explored specific diseases. For example, Hsiao and Emdin (2015) explored the effects of aid in fighting malaria, HIV, and tuberculosis in 120 countries, during the period 1990 to 2010. They find that aid was effective in reducing malaria and HIV mortality, and confirm Mishra and Newhouse’s (2009) findings that aid reduces infant mortality. Taylor et al. (2013) provide a systematic review of 30 studies of the impact of aid on maternal and reproductive health outcomes, and conclude that aid contributes to small improvements in these health outcomes.

There appears to be a micro–macro paradox with respect to health. With regard to growth, Mosley (1986) observed that while many micro studies show that aid creates successful projects, this is not revealed in macro data. Similarly, many micro studies find that aid leads to positive health outcomes (e.g., with respect to certain communities and diseases), but macro studies find mixed results (see Hsiao and Emdin, 2015 ).

Education : The literature on education is just as vast as it is in health. Assessing the impact of aid on education is also not a simple matter. Here, too, there are numerous data and estimation challenges. Myriad factors shape education outcomes, both within and outside the classroom. Numerous interventions have been initiated; some work while others do not ( McEwan 2015 ). Dreher et al. (2008a) correctly point out that a focus on the effects of aggregate (total) aid misses the point that a lot of aid is directed toward specific purposes. They investigated the impact of education aid for 96 countries for the period 1970 to 2004, and show that aid makes a significant contribution to primary-school enrollment. This is confirmed more recently by Alvi and Mukherjee (2015) and also by Birchler and Michaelowa (2016) . Riddell and Niño-Zarazúa (2016) argue that aid has been more effective at improving enrollments but less so in terms of education quality.

There are currently no meta-analyses or systematic reviews of aid effectiveness on health and education. This is essential to integrate and confirm the findings from diverse studies, and quantify the magnitude of effectiveness. Nevertheless, it does appear that aid has had a positive impact on at least some dimensions of education and health.

34.4 The Politics of Aid Effectiveness on Institutions

If aid doesn’t generate growth, perhaps it improves institutions that ultimately affect growth. That is, perhaps reduced-form growth regressions do not adequately and sufficiently capture the channels, nor the underlying time lags, through which aid impacts growth. 8 Moreover, improving institutions is of merit in its own right; even if aid doesn’t generate growth, it may make a significant contribution to welfare in developing countries by, for example, instigating the rule of law, reducing corruption, and increasing civil liberties. Improving institutions is a stated objective of many donors, and it is also a domestic political objective of many developing nations.

34.4.1 Theory

As with all other hypothesized effects, aid can have both positive and negative effects on political institutions. Consequently, the net effect of aid on institutions such as democracy and governance is an empirical issue ( Kersting and Kilby 2014 ). Aid can improve institutions through direct and indirect channels, and it can have both short- and long-term effects. Income and education are examples of indirect channels. Thus, if good institutions are a normal good, and aid stimulates growth, then it will in the long run also improve institutions. Similarly, if education is necessary for institutional quality, then by increasing education, aid contributes to the development of good institutions.

Knack ( 2001 and 2004 ) outlines several direct channels through which aid can assist the development of institutions. For example, aid can be allocated conditional upon, and in exchange for, democratic and institutional reform. Aid can help develop electoral processes, the formation of a free press, an independent judiciary, and civil society organizations in general. Aid might also make it easier to finance reform and, importantly, it may make it easier for elites to accept reform.

The effectiveness of aid in improving the quality of institutions will depend on the recipient’s willingness and, importantly, on the recipient’s ability to restrain rent-seeking and corruption, as well as prevent elites from blocking reform (Bjørnskov 2010). Unfortunately, elites can and do block reform, or they can highjack the reform process in their favor ( Hellman et al. 2003 ).

Knack (2001) notes that aid can also erode the quality of institutions. For example, aid dependence can weaken accountability, and it may stimulate or worsen rent-seeking and corruption. Aid funds are unearned and may thus be viewed by recipients as a windfall. Hence, aid may not be used effectively. Aid may be treated similar to natural resources—that is, funds that soften the recipient’s budget constraint and rents that reduce the recipient’s need for economic reforms and the need to fund its expenditures through taxation ( Remmer 2004 ).

Institutional reform is a political process that evolves through a complex process of internal and external pressures for change ( Askarov and Doucouliagos 2015b ). Moreover, institutions are multidimensional and develop unevenly. Thus, it is likely that aid will have a differential impact on institutions, improving some but not others.

34.4.2 Empirics

Askarov and Doucouliagos (2013) report a meta-analysis of 25 studies with 564 observations of the effect of aid on democracy, and a second meta-analysis of 22 studies with 620 observations of the effect of aid on governance. Their meta-analysis shows that, on balance, aid has either a zero or a negative effect on democracy. They also find that aid was influential in improving governance during the Cold War, but not thereafter. The evidence base has not established that aid contributes to the development of institutions. Thus, there is little reason to believe that aid will contribute to growth through the development of growth-promoting institutions, nor that aid will contribute to desirable institutions.

It is disappointing that the two key stated objectives of aid—to generate growth and to improve the quality of institutions—have not materialized, on average. Nevertheless, aid may be beneficial in certain cases. For example, in their meta-analysis, Askarov and Doucouliagos (2013) find that aid did improve democracy in transition economies. Most studies focus on total aid given to a diverse group of recipients. It is possible, however, that more specific samples may generate different results. For example, table 34.2 reports new results for the association between aid and democracy. The sample consists of 33 countries to which Australia contributes aid, for the period 1976 to 2013. The data are an unbalanced sample of 1,032 observations. Democracy is measured by the Polity 2 index. The model controls for natural resources, real income, ethnic fractionalization, whether the recipient officially declares itself a communist country, the percentage of the population that is Muslim, and whether there is conflict in one of the recipient’s neighbors. In addition to these variables, the model includes four aid variables: aid from Australia, aid from the United States, aid from multilateral donors, and aid from all other donors. The variables are lagged five years to address potential reverse causation. Time dummies are included to control for common time shocks that affect all recipients. Country fixed effects are included in column 1 but not in column 2. These results suggest that Australian aid has played an important role in promoting democracy in those countries in which aid is allocated, whereas aid from the United States and all other bilateral donors (not the United States or Australia) for the same group of recipients has had no effect. Multilateral donor aid has also had a positive effect.

Notes: The dependent variable is democracy measured by Polity 2 . Time fixed effects included but not reported. Standard errors adjusted for within-country clustering. Country fixed effects included in column (1) but not column (2). Sample size is 1,032 annual observations.

denote statistical significance at the 1% and 5% levels, respectively.

34.5 The Politics of Aid Effectiveness on Conflict: Aiding or Abating Violent Conflict?

An important emerging area of research is the impact of aid on conflict. Aid has often been used as a component of foreign policy, and fighting terror and ameliorating conflict are critical dimensions of this. For example, aid can be given to achieve security objectives, including counterinsurgency. Officially, such funds are not classified as aid. However, in practice, some funds can be diverted to counterinsurgency—for example, more aid is given to nations in conflict and the funds either flow directly to fighting conflict or are used to free up other funds to do so. The theoretical literature is, again, divided on this issue, and divergent empirical findings are reported.

34.5.1 Theory

The literature identifies short- and long-term channels. If aid generates growth and increases per capita income, then this can in the long run reduce conflict. Higher incomes, for example, increase the opportunity costs of engaging in conflict. However, as already stated in section 34.3 , it is dubious whether aid stimulates growth; at best, there is only a very small and economically insignificant effect. Another long-term channel is the effect of aid in improving the quality of institutions. Institutional development, including the rule of law and reduced corruption, may reduce conflict and improve the recipient’s capacity to prevent and curtail conflict. Once again, however, the evidence base is thin; there is little evidence that aid improves institutions. Aid might affect human capital formation over the long run. Nevertheless, this presumes that rising incomes and education are necessary to curtail terror. However, terrorists are neither necessarily poor nor poorly educated ( de Mesquita 2005 ).

While the evidence suggests that long-term effects are dubious, aid could have short-term effects. For example, aid flows create a temporary economic-activity effect. One benefit from this is that it can provide immediate budget support to fight insurgents. Similarly, while aid for education is a long-term investment, it may have short-term payoffs in freeing up resources to fight terror. De Mesquita (2005) argues that economic downturns increase terrorism. Hence, if aid can cushion downturns, then it may have a beneficial impact in terms of reducing terrorism. Moreover, aid can reduce conflict if it increases the recipient’s ability to deter rebellion ( Collier 2000 ).

The effectiveness of aid in abating conflict is shaped by the nature and extent of political, ethnic, and religious contests within and between nations. Interjurisdictional competition and inter-state rivalry also plays a role. There may also be a spatial dimension. For example, Askarov and Doucouliagos (2015a) argue that aid in one country could fuel tensions in neighboring countries or, alternatively, aid could improve living conditions and institutions in the recipient, and this may spill over to ease tensions and conflict in neighboring states.

Paradoxically, aid’s success could trigger adverse consequences. For example, terrorists and groups that compete against the incumbent government may resist aid if it transforms institutions in ways that are against their interests. Similarly, aid for education, gender equality, strengthening the judiciary, and empowering civil society might all be resisted if these developments are against the opponents’ ideological or religious beliefs and interests. Alternatively, aid might be seen to be supporting a repressive regime, thereby providing greater motivation to remove it. This may also increase violence against the donors. Similarly, if aid provides budget support, it may enable funds to be funneled to fighting terror or the regime’s opponents, thereby fueling violent conflict. Finally, aid flows can offer attractive pickings for criminals and terrorists. Elites may also seek to capture aid flows that are effectively similar to rents from natural resources. This may either lead to increased violence and crime or divert government efforts in response to nonviolent lobbying and rent-seeking. Grossman (1992) argues that aid increases conflict because it increases the value of capturing the state. In summary, both the regime that receives aid and its domestic and international opponents may respond with greater violence. 9

With regard to federal and state aid, Tullock (1975) notes that lower levels of government might deliberately underinvest in infrastructure so that they remain worthy recipients of federal aid. Similarly, states facing conflict might find it advantageous to keep the conflict going, as this keeps the aid flowing, especially when the conflict is of strategic interest to a donor. An example is U.S. aid to Pakistan. Much of this aid has been used by Pakistan to fuel its arms race against India, rather than for counterinsurgency. Nevertheless, the aid keeps flowing ( Nasir et al. 2012 ).

34.5.2 Empirics

Tables 34.3 and 34.4 chronologically list econometric studies that explore the links between aid and conflict: Table 34.3 lists 10 studies that analyze individual countries, while table 34.4 lists 17 cross-country studies. The tables list the sample characteristics, the measure of conflict, and the key findings with respect to the effect of aid. A meta-analysis or a systematic review is beyond the scope of this survey. However, it appears from table 34.3 that with the exception of two studies that find that aid reduces conflict, the studies find that aid has either no effect on conflict or increases it.

The results reported in table 34.4 are more diverse. The top panel lists eight studies that find that aid reduced conflict, while the bottom panel lists nine studies that find that aid either has had no effect or increased conflict. Vote counting is a poor indicator of the evidence base; science is not democratic ( Stanley and Doucouliagos 2012 ). While cross-country samples are popular, particularly in growth empirics, there is a lot to be said for more nuanced samples. If we take table 34.3 as the better evidence base, then we can conclude that, on balance, aid appears to inflame conflict. If one prefers cross-country evidence (table 34.4 ), then it appears that the impact of aid is mixed. Interestingly, of the six military-aid studies, four find that this type of aid increases conflict: Sylvan (1976) ; Neumayer and Plümper (2011); Fielding and Shortland (2012) ; and Dube and Naidu (2015) . However, two studies find that small and targeted military aid reduces conflict: Chou (2012) and Berman et al. (2013) . The application of tools such as meta-analysis may be beneficial here as the evidence base grows, particularly to identify the conditioning factors.

The policy implications are, of course, strikingly different. If aid does reduce conflict, then more aid to conflict zones will be beneficial to recipients. It will also be beneficial to donors if terrorists emanate from recipient nations. However, if aid inflames conflict, then greater caution needs to be exercised in aid allocations. Of course, the situation is complicated when emergencies necessitate the delivery of humanitarian assistance to conflict situations, as in the case of the Syrian civil war.

34.5.3 An Appraisal

Compared to the effect of aid on growth, literature on the effect of aid on conflict is still in infant stage. Much remains to be investigated. Endogeneity is also an issue in this literature. For example, donors are likely to reduce economic aid during conflict while some may increase military aid. If aid is reduced when conflict rises, this may result in a false impression that aid reduces conflict. Studies have tried to address endogeneity in various ways, but as yet there is no robust and widely accepted identification strategy in this literature; the causal mechanisms remain unclear and many of the theoretical explanations have yet to be matched by evidence.

Collier and Hoeffler (2002) find no direct effect from aid to conflict. However, they hypothesize a favorable effect working through growth.

Another shortcoming of the literature is that most studies ignore spatial spillovers from conflict. Askarov and Doucouliagos (2015a) find no spatial conflict spillovers from aid for transition economies; however, little is known about the spillover effects of aid elsewhere. Also, little is known about the role of institutions: Is aid more or less effective in abating conflict in democracies compared to nondemocracies? Moreover, conflict takes many forms. Little is known about the effect of aid on methods that regimes might use to counter terror—for example, mass killings versus mass repression. Does aid affect the level of brutality? Do different donors have differential effects—for example, is the United States more or less effective in curtailing conflict than other donors? Is there a difference between bilateral and multilateral aid? Finally, the focus of this literature is on violent conflict. We know little about the effects of aid on nonviolent conflict, such as political agitation, demonstrations, and industrial disputes to effect political change.

The impact of aid on conflict remains an important area of research. Perhaps it will become more so in the coming decades. The OECD recently changed the definition of aid to include some activities relating to “peace and security” and to fend off “violent extremism,” especially in fragile developing states (OECD 2016). This means that lines may become even more blurred, the aid may be more fungible, and it may be more important to monitor and assess the effects of aid on conflict. Indeed, the OECD specifically warns DAC members from using aid “as a vehicle to promote providers’ security interests” (OECD 2016, 2). Is this a warning that they will heed?

There is another implication from the findings reported in tables 34.3 and 34.4 . Most studies find aid to be an important variable. This suggests that studies of conflict that do not control for aid, or otherwise accommodate reverse causality, may very well face omitted variable bias.

34.6 The Politics of Aid Research

This section discusses the politics of aid research, asking whether the evidence base is sufficiently credible to draw valid inferences and to develop evidence-based policies. The expectation is that the vast research effort on aid will inform policy, the public in general, and, of course, the researchers’ own inquisitive minds. Researchers are also rational agents ( Paldam 2016 ) and the process of researching aid can itself at times be political. For example, funding bodies have their interests, researchers take ideological positions, and career concerns can influence the work carried out and results reported ( Frey 2003 ). Evidence-based policy with respect to aid requires a credible evidence base. Is the aid literature credible? Credibility has several dimensions ( Ioannidis and Doucouliagos 2013 ). The discussion here focuses on publication selection bias, heterogeneity, and statistical power.

34.6.1 Publication Selection Bias

Publication selection occurs when certain empirical results are suppressed and hidden from the public domain. Publication selection bias can artificially inflate econometric estimates, creating the appearance of aid effectiveness where none exists (or, conversely, when selection preference is in favor of accepting the null, selection gives the impression of aid ineffectiveness). Doucouliagos and Paldam (2008) , Mekasha and Tarp (2013) , and Doucouliagos and Paldam (2015) find publication bias in the literature on aid for growth. Similarly, Askarov and Doucouliagos (2013) detect publication bias in the literature on the impact of aid on institutions. These studies suggest that publication bias may be an issue in other areas of aid research. For example, publication bias has not been investigated for the conflict-aid literature, but it remains a real possibility.

Figure 34.1 illustrates the distribution of 1,361 estimates of the growth effectiveness of aggregate aid in the form of a scatter diagram, with the partial correlation on the vertical axis and its standard error on the horizontal axis. 10 Two features stand out. First and foremost, the partial correlations appear to be centered on zero, confirming aid ineffectiveness. Second, the upward-sloping trend line plots the relationship between the estimated partial correlation and its standard error, with a coefficient of 0.59 with a t -statistic of 2.32 using standard errors adjusted for clustering at the study level ( t -statistic is 6.79 without adjusting standard errors). The trend line suggests a small degree of publication selection; in the absence of publication selection, there should be no association between an estimated effect and its estimated standard error. 11

Selection Bias in the Aid-Effectiveness Literature

Figure 34.2 illustrates the evolution of the aid-effectiveness literature in the form of “funnel plots” where precision (inverse of standard error) is plotted on the vertical axis and partial correlations on the horizontal axis, for four time periods. 12 There is a clear preference in the earlier time periods to report positive partial correlations. However, over time, competition between authors and the market for ideas has revealed the underlying distribution centered on a near zero correlation.

Evolution of the Aid (In)Effectiveness on Growth Literature

34.6.2 Statistical Power

Empirical studies on aid focus almost exclusively on tests of significance—for example, does aid have a statistically significant coefficient in a growth regression? This literature, however, ignores tests of statistical power. Unfortunately for economic science, the empirical aid literature is not unique. For example, Ziliak and McCloskey (2004) found that only 8% of the empirical studies published in the American Economic Review actually consider statistical power. Statistical power is the likelihood that an empirical test will detect a genuine empirical effect, if an empirical effect actually exists. Adequate power is customarily defined as 80% or higher. Ioannidis et al. (2017) show that applied economics studies are typically underpowered. They survey 64,076 estimates from 6,700 econometric studies and find that the median statistical power is only 18%. 13 One of their really worrying findings is that all the estimates of aid effectiveness on institutions are underpowered—that is, there is no single, adequately powered estimate reported in this literature! The aid effectiveness on growth literature fares little better, with around 1% of the 1,779 estimates having adequate power. The best-performing area is the literature on the effectiveness of aid in generating savings, where 15% of the estimates have adequate statistical power.

This low statistical power is disturbing because it means that aid studies are unable to find an effect if one exists. It also raises questions regarding how authors manage to report statistically significant effects with underpowered studies. Ioannidis (2005) and Ioannidis et al. (2017) show that low statistical power is a cause of publication selection bias and leads to high rates of false positives.

Table 34.5 , column 2, compares statistical power in several areas of the aid literature. Column 3 reports the percentage of estimates that report a statistically significant coefficient, and column 4 reports the percentage of results that find a favorable effect from aid. In the case of aid effectiveness on democracy, 31% of the estimates report a statistically significant positive effect, even though there is not a single adequately powered study in the group. 14 Moreover, 57% of the estimates report a statistically significant effect (either positive or negative). Likewise, in the literature on the effect of aid on savings, 73% of estimates report statistically significant effects, even though only 16% of the estimates are adequately powered. The last row of table 34.5 shows that for the 5,172 estimates from the seven areas of aid research, only 2% have adequate statistical power, and yet nearly half of the estimates are reported to be statistically significant.

Notes: Data for column (2) derived from Ioannidis et al. (2017) . Columns (3) and (4) are author’s own calculations.

34.6.3 Excess Heterogeneity

An additional feature of econometric studies is excess heterogeneity. Heterogeneity is the variation in reported estimates beyond sampling error. Even a casual reader of the empirical aid literature is readily struck by the excessively wide range of reported econometric findings. The meta-studies discussed here all confirm excessive heterogeneity. Some of this is driven by spatial and time differences in the underlying relationships. However, much of the heterogeneity is driven by analytical flexibility, as authors adopt diverse specifications and use different samples, measures, and estimators to modify results. Heterogeneity is also driven by incentives in academia and the drive and pressures to publish. All these factors lead to excessive heterogeneity. The inevitable result is murky empirics and a major problem for consumers of research. Which results are accurate? Which results should policymakers rely upon for statistical inference?

Publication bias, low statistical power, and excessive heterogeneity all reduce the aid literature’s credibility. This is an area that warrants much more in-depth investigation.

34.7 Discussion and Summary

Public-choice issues are at the forefront of aid allocations and aid effectiveness. Econometric studies that ignore the role of public choice may produce biased estimates of both aid effectiveness and aid-allocation decisions because they omit important variables of the donating countries, and they may also misinterpret recipient variables that affect donor choices. Aid is given, received, and researched by rational actors. Aid has been shown to have diverse effects, often opposite of what donors’ intended. The theoretical and empirical literature on aid is immense. What generalizes in aid? We can draw several conclusions from the prior quantitative reviews of the evidence base and the mentioned survey.

First, aid stimulates some investment, but most aid displaces domestic savings as government expenditure rises. Second, aid has been ineffective in generating growth, on average. Third, aid has in general been ineffective in improving institutions. However, there appear to be periods and regions during which aid did improve the quality of institutions. This raises hopes that aid could be made more effective. Fourth, it appears that public spending can improve health outcomes, offering the hope that aid can improve health. However, there is also evidence that aid displaces health expenditure. Yet, while there is mixed evidence with regard to health, there are enough encouraging findings. Similarly, there is evidence that aid can improve education outcomes. Nevertheless, much more evidence is needed. Indeed, compared to the enormous literature on the effects of aid on growth, the literature on effects of aid on health and education is miniscule. The evidence is also mixed with regard to conflict. However, most single-country studies suggest that aid increases conflict. Military aid seems to inflame conflict, though there is some evidence that small amounts of well-targeted military aid may reduce conflict.

Where to go from here? At least two paths for future research may prove fruitful: research synthesis and new primary econometric studies. Research synthesis can play a critical role in drawing inferences and lessons from the evolving aid research. This can be most efficiently achieved by meta-regression analysis and systematic reviews of the accumulating evidence.

Additional primary studies are clearly needed, as well. Nonetheless, the literature on the growth effects of aid is particularly crowded. Additional standard growth regressions are unlikely to be particularly informative. However, subnational studies, spatial studies, and analysis of more focused components of aid may provide important insights. Most econometric studies on aid have used data aggregated at the national level. This is now changing with the increasing availability of subnational data. Subnational and geo-referenced data have opened new avenues for investigating aid, potentially enabling more nuanced analysis, especially with regard to the distribution of aid within a recipient and its local impact. Analysis of such data has already provided some interesting findings. For example, Briggs (2014) uses geo-referenced data on Kenya and shows that aid has been allocated predominantly to the president’s base. Findley et al. (2011) use project-level disaggregate data to assess the impact of aid on conflict in Sierra Leone, Angola, and Mozambique. Odokonyero et al. (2015) use geo-referenced aid data to assess health in Uganda. Dreher et al. (2016) show that Chinese aid tends to be allocated to African leaders’ birth region. 15

The empirics typically employ reduced-form regressions that rarely model the game between donors and between donors and recipients. Consequently, while there is some informative research, relatively little is known about the underlying processes: Is aid a sequential or simultaneous game? Who leads? Who follows? What roles do the United States, the World Bank, and the Scandinavian “good” donors play in setting examples for others to follow?

Another promising line of inquiry is investigation of new donors, especially China, Russia, and Arab donors, and also NGOs and private donors (see, for example, Dreher and Fuchs 2015 ). Analysis of spatial spillovers and externalities arising from aid is also potentially instructive ( Askarov and Doucouliagos 2015a ). Other under-researched areas include the impact of aid on wealth and income distribution, technology transfer, regulatory reform, and the ideological orientation of recipient governments.

As noted by Buchanan (1975) and Tullock (1975) , recipients can manipulate altruistic donors by reducing their own contributions and effort. Consequently, altruistic donors find that they end up sequentially following recipients.

One issue that has received little attention is the areas over which cooperation might occur. For example, anecdotal evidence suggests that donors are more willing to cooperate with regard to advocacy and less so with respect to disbursements.

One could just as easily refer to donor needs and recipient interests. Or, more correctly, to donor and recipient interests.

Donor motives frequently diverge from recipient practice. For example, one of the author’s extended family members was actively involved in grassroots NGO aid initiatives to a Pacific Island. In one instance, funds were raised for a sewing machine, which was delivered to a village elder. In a subsequent visit to the village it was revealed that the sewing machine was used for patronage rather than where it was needed the most.

For a detailed analysis of the United Nations Security Council, see Vreeland and Dreher (2014) .

Aid is only one instrument in the pursuit of political interests. For example, Oatley and Yackee (2004) find that the United States uses its influence in the IMF to pursue its “financial and foreign policy objectives.”

The terms “random-effects” and “fixed-effects” relate to the weights used in meta-analysis and not to panel structure. Weighted averages are essential when estimates are reported with varying precision. Hence, an unweighted average will be biased. Consequently, researchers opt for inverse variance weights, either fixed or random.

The econometric evidence on the links between institutions and growth is, however, weak. For example, Doucouliagos and Ulubasoglu (2008) conducted a meta-analysis of the econometric literature on the impact of democracy on growth, and find that democracy has no effect on growth, on average. Perhaps the causality runs the other way and democracy is a normal good.

Naturally it is not the intention of donors and aid agencies to worsen conflict. Rather, this is an unintentional consequence.

The data are described in Doucouliagos and Paldam (2012) . The partial correlation measures the correlation between aid and growth conditional on all other factors that affect growth.

For a fuller discussion on publication selection in aid effectiveness, see Doucouliagos and Paldam ( 2009 , 2012 , 2013 , and 2015).

A literature that is free of publication selection bias will display a funnel plot that is symmetrically distributed on the average underlying effect; see Stanley and Doucouliagos (2012) for details.

Statistical power can be calculated by comparing an estimate’s standard error to the absolute value of the fixed-effect weighted average divided by 2.8. See Ioannidis et al. (2017) for details.

The reader might be interested to know that the new results presented in table 34.1 are also underpowered.

The benefits of subnational data notwithstanding, there remain strong arguments for the use of aggregate data. Aid to one location need not stay in that location. For example, local borders are very porous and local spillovers from one jurisdiction to another are a real possibility. Thus, funds directed in one location may well end up elsewhere. Moreover, there may also be spillovers from one type of aid to another. For example, spending on infrastructure may benefit the education and health sectors.

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20 Advantages and Disadvantages of Foreign Aid to Developing Countries

Foreign aid occurs when the resources of one country are given to another nation as a way to provide supports of some type. Almost any type of resource can qualify as foreign aid, including money, materials, or labor.

Governments in the roughly 40 developed countries often provide foreign aid to the developing world as a way to improve resource access and boost the local economy. It is possible for anyone to contribute to this process, which means there are organizations and individuals who send resources to others overseas as well.

You might hear the terms “economic aid,” “international aid,” or “developmental aid” when discussing resource transfers with someone. Each option is another way to describe the processes of foreign aid.

There are two types which trade hands each year around the world: multilateral and bilateral.

Multilateral foreign aid is a collective action taken by several governments, organizations, or individuals to help a specific cause. The bilateral version is the direct giving of resources from one government to another.

The United States offers roughly $30 billion in foreign aid to almost every country in the world each year. Here are the crucial points to review when looking at this subject.

List of the Pros of Foreign Aid

1. Foreign aid benefits the domestic economy at the same time as the international one. The issuance of foreign aid can take on several different forms. Governments can offer it as an outright gift or grant that does not require any repayment. Another option is to offer a low-interest loan that allows for a small window of profit to the gifting nation. One of the most population ways to issue this resource, however, is to have it come with what is called a “donor caveat.”

The donor nation offering the foreign aid can stipulate that a specific percentage of the goods, sometimes as high as 30%, be purchased by the recipient from their domestic providers. If the U.S. gave foreign aid to the Philippines with this rule, then they would need to purchase American goods at that percentage to qualify for the aid.

2. Foreign aid creates a stronger relationship for all the parties involved in the transaction. An individual, business, or government can offer foreign aid to take advantage of this benefit. People often receive benefits when they give them to others. Even the U.S. receives foreign aid each year. It isn’t always a large gift, but it is still a meaningful gesture. The Masai of southern Kenya once gave Americans 14 cows after the attacks of 9/11 as a gesture of solidarity. When anyone is willing to give, the goodwill it creates can create a lifetime of positive memories. This process helps to make the world a smaller, more peaceful place.

3. Foreign aid can reduce the impact of poverty. 80% of the world’s population lives on a salary of $10 or less per day. There are states in the U.S. where the minimum wage per hour is higher than that. When the wealthy countries contribute some of their excess wealth to the poor nations of the world, then they can make a positive impact on poverty in that region. The amount given by Americans to the rest of the world is equal to what it would take to alleviate hunger right now. Imagine what could happen if the world’s 40 wealthiest countries got together for a multilateral grant, contributing $1 billion each annually, to improve food production and distribution systems. That’s the power of foreign aid.

4. Foreign aid provides economic opportunities for the giver and the recipient. Countries that give foreign aid can receive economic benefits without having a donor caveat in place because of the stimulus effort it creates. From the improved international relationships to the increase in job opportunities, this process can form the foundation of trade talks, security agreements, and compacts of mutual aid. Although there is an initial expense that taxpayers must face when this gift is offered at first, it will also pay dividends for a long time after thanks to the impacts it creates.

5. Foreign aid encourages national independence. Foreign aid helped many countries remain independent throughout the 19th century as another wave of colonization swept around the planet. It supplies resources of national security even today because the funds are useful in the war against terrorism. When the funds can also supply strength to weak institutions, prevent corruption in governments, encourage transparency, and fight poverty, then there are fewer opportunities for a hostile force to step in and try to take over the government.

6. Foreign aid can offer agricultural improvements. The world’s top 3 food producers are China, India, and the United States. The U.S. is regularly the top food exporter globally, finishing second in total production most years. Chinese agricultural needs often remain domestic. India sometimes outproduces Americans on this front too, which is understandable considering the size of each population center. When these world leaders in this fundamental economic product teach others how to maximize their resources, it creates agricultural improvements that can reduce hunger permanently while creating a potential trading partner in the future.

7. Foreign aid allows countries to help others without direct interference. The provision of foreign aid allows a government, business, or individual to offer financial support to others as a way to solve local problems without direct interference on their part that could destabilize the region. Many countries offer the developing world funds that work to stop serious diseases like ebola and AIDS, fight addiction, combat terrorism, or begin building necessary infrastructure items. The eventual goal is to help these countries develop enough resources that they can eventually support themselves and no longer require the foreign aid for survival.

8. Foreign aid doesn’t require a significant amount to create positive change. The University of Pennsylvania conducted a research study that asked Americans how much they thought their country spent of foreign aid out of the annual budget. The average amount that people guessed was 26%. The actual amount is less than 1% each year. Because the value of currency is much higher than what most other nations who need foreign aid have with their own, a little bit of assistance can offer a lot of support for a family in need.

Haiti is an excellent example of this advantage. If you have 1 USD, then you can exchange that for roughly 80 Haitian Gourde. A family who receives a $20 donation in foreign aid can purchase new clothing, livestock, medicine, shoes, and food supplies and potentially still have cash left over for an emergency. That’s why the value of foreign aid is such a powerful economic generator.

List of the Cons of Foreign Aid

1. Foreign aid can increase local prices. When foreign aid is offered at any left, the goal is to help that nation create their own resource chain that can be used to create the essentials of life: food, water, clothing, and shelter. Most markets operate on the basis of supply and demand. If you give people more money to spend, then you give them more access to resources. That lessens the local supply, which drives up prices. Even though there is no cost associated with the gift, the price inflation may never go away. This process creates a cycle where foreign aid can become constantly necessary.

2. Foreign aid benefits those who operate on an economy of scale. When governments issue a contract for foreign aid provision, they are wanting to work with companies that can provide the most value for the investment offered to someone else. That means small providers can struggle to stay competitive for this domestic economic gain. Most of the work will go to the biggest companies that can provide the cheapest work. It becomes another example of how those who have money can make more of it, while those who do not must struggle to survive.

3. Foreign aid is sometimes offered as a political tool. Hyeon-Jae Seo wrote this for the Harvard International Review in 2017 regarding foreign aid. “Aid is never as simple as one country providing resources for another – rather, it is often a highly complex political maneuver with a multitude of intertwined purposes resulting in varying degrees of impact and potentially harmful consequences.”

It is very easy for foreign aid offers to become political tools. Countries can withdraw their resources as a way to create changes that they want to see in the government. This impact can create the effect of a coup without ever setting foot in the country.

4. Foreign aid can be used as a method of global favoritism. Although the United States offers foreign aid to over 180 different countries each year, there are only five nations that receive over $1 billion in direct aid each year. That figure is for cash grants, gifts, or loans that are handed out each year. One of the most significant recipients of U.S. foreign aid is Israel. Americans currently supply $3.8 billion each year to the country in military aid that does not qualify as “foreign” aid under budgetary classification.

The same issue can be found with aid given to Lebanon. Over $16 million in laser-guided rockets were given to the local military by the U.S. as a “firm and ready” commitment to the country in 2018.

5. Foreign aid is easily wasted, especially when it is not wanted. Between 1971-1994, over $1 trillion in foreign aid was handed out by the United States to help the 70 poorest countries in the world. Numerous other governments supplied aid to the tune of hundreds of billions in funding as well. By 1996, the United Nations was forced to make the declaration that 43 out of the 70 countries were in a worse financial position than they were before they received their first gift. When the money is not wanted in the first place or invested in areas that create economic stability, then foreign aid becomes a trail of cash that creates dependencies.

6. Foreign aid does not create more peace in the world. Between 1971-1994, Somalia received $6.2 billion in foreign aid from the United States and still ended up being under U.S. military occupation. Haiti received $3.1 billion and experienced the same result. There are several countries experienced warfare or economic chaos while receiving at least $3 billion in aid during that same period. Chad, Burundi, Rwanda, Uganda, Zaire, Mozambique, Ethiopia, and Sudan are all on that list. The final three countries all received over $10 billion in foreign aid.

7. Foreign aid does not offer a guaranteed benefit. Even though many countries will try to place donor caveats on the foreign aid they provide to others, there is not usually a system of accountability in place that allows officials to follow-up on where the money goes or how it is spent. The United States passed the Foreign Aid Transparency and Accountability Act in 2016 and there is no plan in place to create any oversight of the money that is headed to other countries. Even more problematic is the fact that the U.S. now has multiple data points to study because of the legislation.

As Representative Gerry Connolly (D-Virginia) told the press in January, “Let’s have uniform data so we’re all singing from the same hymnal. We could all make different conclusions about what that data means, but to have different sets of data… in no way is in the spirit of our bill.” When there is no accountability, then countries can spend the money on anything they want.

8. Foreign aid creates dependencies when not correctly managed. Mozambique gets to make another appearance in the list of disadvantages of foreign aid. Ever since they started receiving assistance from the United States, the level of dependency as a percentage of their GDP rose by 16 percentage points in less than 20 years. Ghana saw an increase of 20 percentage points using the same measurement. When nearly half of a country’s budget comes from financial assistance provided by other nations, then they are no longer in a position to develop new resources. They will sit and wait for the next check to come their way.

9. Foreign aid can cause special interests to get involved with foreign governments. Long-term foreign aid typically reduces the effectiveness of governing at the local level for the recipient. One of the primary reasons for this disadvantage is the fact that there are contractors and special interests involved in the process when non-money aid is offered to a foreign government.

It is in the domestic interest to maintain those relationships because it keeps money flowing through the company. Lobbying efforts form to keep elected officials renewing the aid packets to ensure the revenues keep coming in to support the company. It doesn’t take long for the foreign aid to become more about what it can do for businesses and special interests more than what it does for those who receive it.

10. Foreign aid can encourage conflict. Countries in Africa who receive foreign aid are under the suspicion of creating conflict or prolonging its existence because the presence of violence brings more money into the country. There are times when this resource can offer stability to a country, but it should never be tied to a specific regime or structure. When that occurs, then it becomes advantageous for the recipient to remain unstable because that guarantees more access to free or low-cost resources without the need to offer anything in return.

11. Foreign aid reduces or eliminates market pricing. When there are donor caveats in place for foreign aid, then the giver creates a market shift in the economy of the recipient. The cheaper, subsidized goods that the government must purchase to receive the aid makes it challenging for local producers to compete with that pricing. That leaves domestic companies with two choices: lower their prices to match or go out of business. Most choose the former instead of the latter, so it impacts the quality of life adversely because of the artificial competition in their marketplace.

12. Foreign aid doesn’t create wealth. The purpose of foreign aid is to provide an option for survival. People and governments can experience a positive economic impact when its presence is available in society. What it does not offer is an opportunity to create wealth at the household level of society. It will not usually create a higher rate of savings or investment in the general population. There are even times when this resource creates lower levels of wealth because households focus on spending or see their currency devalued because of the artificial infusion of capital.

The pros and cons of foreign aid can be a tricky balancing act to navigate. On one hand, there is a natural desire to help other people and countries who find themselves in a disadvantaged position. On the other hand, there is the need for oversight and accountability that can put a rift in some international relationships. When we get it right, then incredible things can happen in our world. That’s why each

IDA—A Crucial Player in the Evolving Global Aid Landscape

With its global footprint and convening power, IDA provides a lifeline for the 1.3 billion people living in the world’s poorest countries. 

Today the International Development Association (IDA) launched the report “Financing the Future: IDA’s Role in the Evolving Global Aid Architecture.” The report describes the increasingly complex relationship between donors and recipient countries and lays out a strong rationale for investing in IDA’s next funding round for better financial and development outcomes.

In the context of interlocking crises and growing demand for development finance, the global aid architecture faces significant challenges. Official financial flows to developing countries have increased over the past two decades, reaching $1 trillion in 2021. Yet they fall well short of the escalating need for financing to address climate change, conflict, and pandemics, estimated at $2.4 trillion per year between 2023 and 2030.

Broad development aid trends complicate this challenge. Over the last 20 years, there has been significant circumvention of recipient government budgets, with only 40 percent of official financial flows being channeled through recipient governments. By contrast, the vast majority of IDA funding goes through recipients’ national budgets, building capacity in the process. There has also been an expansion of earmarked aid unsupported by financial leverage and a multiplication of donor channels, contributing to further fragmentation of aid transactions—countries like Ethiopia, Mozambique, and Nepal deal with more than 170 donor agencies, each with its own rules and requirements. In combination, these trends have resulted in a large increase in transaction costs to recipient countries and raise concerns about how to collectively achieve better development outcomes with existing resources.

In this changing landscape, IDA stands out among multilateral development banks in addressing these challenges due to its unique value proposition.

First , IDA’s role as a catalyst allows it to address recipient country priorities, build country governments’ capacity and help them deal with proliferation and fragmentation. Drawing on its presence on the ground, ability to source knowledge globally IDA tailors interventions to address specific regional and global priorities.

Second , IDA serves as a global forum for governments, civil society organizations, and development agencies to coordinate and align their efforts, helping to reduce fragmentation in the global aid architecture.

Third , IDA’s unique hybrid financial model, which combines partner contributions with capital market borrowing at low interest rates, allows it to leverage additional resources for the poorest countries. This model has significantly expanded IDA’s financial capacity, enabling it to mobilize about $3.50 in IDA commitments for every dollar of partner contributions.

To respond to the needs of the present and future, IDA needs to expand its financial firepower. With its global footprint and convening power, ability to generate knowledge, policy access, and financial leverage, IDA provides a lifeline for the 1.3 billion people living in the world’s poorest countries. The forthcoming IDA21 replenishment needs to match global ambitions with the necessary commitment to end poverty on a livable planet.

Road to IDA21

Aid Architecture: Understanding the Latest Trends in Aid Effectiveness

Why should the World Invest in IDA?  (PDF)

How does the IDA Hybrid Financial Model work?  (PDF)

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Q2. ‘International aid’ is an accepted form of helping ‘resource-challenged’ nations. Comment on ‘ethics in contemporary international aid’.  Support your answer with suitable examples. (Answer in 150 words)10

  Introduction

In a world marked by stark disparities in wealth and resources, international aid is crucial for nations struggling to meet the basic needs of their people. From famine relief and disaster response to long-term development projects, international aid continues to play a vital role.

However, in today’s world, some ethical considerations are paramount in ensuring that aid effectively addresses real needs. To list some –

  1)Donors attaching conditions to aid- such as policy change or aligning with donors’ foreign interest thereby undermining the sovereignty of the country.

E.g.- a)China Pakistan Economic Corridor(CPEC), China supporting development project in Pakistan with an intent to access the Middle East and African countries and the Indian Ocean via Gwadar Port.

b)On account of Sri Lanka’s failure to pay debt, China took Hambantota port on a 99-year lease

2)Creating perpetual Dependency – rather than to empower the recipient nation.

E.g.-Though LDC’s(Least Developed Countries) have been receiving foreign aid for a long there has not been any significant economic development.

3)Lack of Transparency and Accountability- Corruption and mismanagement diverts aid from those in need.

E.g.- a)”Oil for Food”(UNSC’s initiative) scandal by Iraq

b)Misappropriation of Ebola funds in West African countries in 2015.

4)Cultural consideration- Aid projects can hurt cultural sentiments if not rolled out in the right manner.

E.g.- Mass burials without consideration of cultural norms post-Haiti earthquake in 2010 through international aid distressed local population.

5)Environmental Degradation –

E.g.- Foreign aid to the Mato Grosso region in Brazil has resulted in the deforestation of millions of acres for soybean production.

In sum, the ethics of contemporary international aid represent a delicate balance between noble intentions and complex realities. However, efforts should be to prioritise values of fairness and justice while furthering the cause of global solidarity and sustainable development.

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Here’s What’s in the Foreign Aid Package That Is About to Become Law

Assistance for Ukraine, Israel and Taiwan is paired with legislation to impose fresh rounds of sanctions on Iran and Russia and a measure that could lead to a ban on TikTok in the United States.

By Robert Jimison

Reporting from Washington

The Senate on Tuesday approved a $95.3 billion foreign aid package for Ukraine, Israel and Taiwan that had been stalled in Congress for months.

The legislation, a version of which passed the Senate in February with bipartisan support, passed 79 to 18, reflecting widespread backing in both parties.

To steer around opposition from right-wing Republicans in the House, Speaker Mike Johnson, Republican of Louisiana, used a convoluted plan to pass it over the weekend. He broke the package into three pieces for each of the countries — allowing different coalitions to back each one — and added a fourth bill that includes a new round of sanctions on Iran and a measure to require the sale of TikTok by its Chinese owner or ban it in the United States. After passage, all four were folded together into one bill and sent to the Senate.

Final approval by the Senate sends it to President Biden, who said he would sign it on Wednesday.

Here is what the foreign aid package contains:

$60.8 billion for Ukraine

Military funding for Ukraine makes up the largest part of the package, totaling $60.8 billion. A sizable amount is set aside to “replenish American defense stockpiles” and it grants billions for the purchase of U.S. defense systems, which Ukrainian officials have said for months are badly needed.

The bill closely mirrors the original Senate package, but the House added a requirement for the Biden administration to send more American-made missiles known as long-range ATACMS to Kyiv. The United States previously supplied Ukraine with a cluster-munition version of the missiles, after President Biden overcame his longstanding reluctance to providing the weapons and permitted the Pentagon to deliver them covertly.

Another provision included by the House directs the president to seek repayment of $10 billion in economic assistance, a concept supported by former President Donald J. Trump, who has pushed for any aid to Kyiv to be in the form of a loan. But the bill also allows the president to forgive those loans starting in 2026.

$26.4 billion for Israel and humanitarian aid

The bill sends roughly $15 billion in military aid to Israel as the country continues its offensive against Hamas in Gaza and weighs a response to attacks from Iran. It prioritizes defensive capabilities, providing more than $5 billion to replenish the Iron Dome, David’s Sling and Iron Beam defense systems. An additional $2.4 billion is directed to current U.S. military operations in the region.

Another $9 billion goes to “worldwide humanitarian aid,” including for civilians in Gaza. Like the Senate bill, the package bars funding from going to UNRWA, the main United Nations agency that provides aid to Palestinians in Gaza. It does not put any conditions on military aid, a sticking point for some left-wing Democrats who have become more vocal in their calls to force the Israeli government to modify its military tactics in Gaza.

$8.1 billion for Taiwan and other allies

A third piece provides $8.1 billion in aid for Taiwan and other U.S. allies in the Indo-Pacific region to counter China. The House attached a provision allowing the Pentagon to quickly provide Taiwan with more offensive weapons and provides billions more for the purchase of advanced U.S. weapons technology as the U.S. and Taiwanese governments continue to build up their alliances to deter China from invading the island.

A sweetener bill

A fourth part of the package, added by the House, includes several Republican priorities that Mr. Johnson cobbled together to make the aid package more palatable to members of his own party.

One piece redirects funds from seized Russian assets to offset American aid to Ukraine. Republicans who back the plan say it will ensure that Russia’s president, Vladimir V. Putin, is held financially accountable for the war.

American allies, including France and Germany, have been skeptical about the viability of such a move under international law. They have instead been pushing for a solution that uses the proceeds on the interest from the nearly $300 billion of frozen Russian assets to give to Ukraine directly, either in the form of loans or as collateral to borrow money.

The bill also imposes sanctions on Iranian and Russian officials and further limit the export of U.S. technology used to make Iranian drones.

And it includes legislation to force the parent company of TikTok, the popular social media app, to sell the platform or face a ban in the United States . It mirrors a bill that the House passed last month . But it includes an option to extend the deadline for a sale to nine months from the original six, and allows the president to extend it for another 90 days if progress toward a sale is being made.

Catie Edmondson and Alan Rappeport contributed reporting.

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More aid is supposed to be entering the Gaza Strip. Why isn’t it helping?

Dozens of aid trucks entered Gaza through Rafah crossing on Thursday, amid international pressure for Israel to allow more humanitarian supplies into the besieged enclave. (AP video by Mohammad Jahjouh / Production by Wafaa Shurafa)

FILE - A truck carrying humanitarian aid for the Gaza Strip passes through the Kerem Shalom Crossing in southern Israel, Thursday, March 14, 2024. Under heavy U.S. pressure, Israel has promised to ramp up aid to Gaza dramatically, saying last week it would open another cargo crossing and surge more trucks than ever before into the besieged enclave. But days later, there are few signs of those promises materializing and international officials say famine is fast approaching in hard-hit northern Gaza. (AP Photo/Ohad Zwigenberg, File)

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FILE - Trucks carrying humanitarian aid for the Gaza Strip pass through the inspection area at the Kerem Shalom Crossing in southern Israel, Thursday, March 14, 2024. Under heavy U.S. pressure, Israel has promised to ramp up aid to Gaza dramatically, saying last week it would open another cargo crossing and surge more trucks than ever before into the besieged enclave. But days later, there are few signs of those promises materializing and international officials say famine is fast approaching in hard-hit northern Gaza. (AP Photo/Ohad Zwigenberg, File)

JERUSALEM (AP) — Under heavy U.S. pressure, Israel has promised to ramp up aid to Gaza dramatically , saying last week it would open another cargo crossing and surge more trucks than ever before into the besieged enclave.

But days later, there are few signs of those promises materializing and international officials say starvation is widespread in hard-hit northern Gaza.

Samantha Power, administrator of the U.S. Agency for International Development, said this week she accepted “credible” reports that famine is now occurring in the area and urged Israel to take further steps to expedite humanitarian aid shipments.

Power’s remarks echoed those of U.S. President Joe Biden, who said on Wednesday that Israeli efforts to increase aid were “not enough.”

While Israel says it has dramatically increased the number of aid trucks entering the territory, U.N. workers report only a slight uptick — possibly because they count trucks differently.

Here’s what we know about the aid entering Gaza, and why discrepancies in reporting persist:

HOW MUCH AID IS ENTERING GAZA?

Israel says that since Sunday it has transported an average of 400 trucks a day into Gaza and that aid is now piling up on the Palestinian side of the Kerem Shalom crossing, one of two major crossings into the territory.

FILE - Trucks carrying humanitarian aid for the Gaza Strip pass through the inspection area at the Kerem Shalom Crossing in southern Israel, Thursday, March 14, 2024. (AP Photo/Ohad Zwigenberg, File)

But Juliette Touma, communications director for the U.N. agency for Palestinian refugees, known as UNRWA, said that while aid workers have noticed a slight increase in the amount of aid entering Gaza, it’s nothing close to the surge Israel is claiming.

On Monday, UNRWA says 223 trucks of aid passed. On Tuesday, that number hit 246. On Wednesday, it was down to 141.

Meanwhile, only trickles of aid are reaching northern Gaza.

WHAT HAS ISRAEL PROMISED?

After Biden said last week that future American support for the war in Gaza depends on Israel doing more to protect civilians and aid workers, Israeli Prime Minister Benjamin Netanyahu promised a series of steps. Biden spoke out after an Israeli airstrike killed seven aid workers delivering food to the strip.

Netanyahu pledged to immediately re-open Israel’s Erez crossing into northern Gaza — a pedestrian crossing destroyed by Hamas militants when they stormed into southern Israel on Oct. 7. Netanyahu also said he would allow Israel’s port in Ashdod to process aid shipments and increase Jordanian aid packages through another land crossing.

FILE - A truck carrying humanitarian aid for the Gaza Strip passes through the Kerem Shalom Crossing in southern Israel, Thursday, March 14, 2024. (AP Photo/Ohad Zwigenberg, File)

But Israeli officials this week dropped the plan to open Erez. Instead, they say a new crossing will be built, though it is unclear when it will open. The Ashdod port, meanwhile, is not yet accepting aid shipments and Gaza aid groups report no significant increase in trucks received at their warehouses.

Before the latest Israel-Hamas war, some 500 trucks carrying food, fuel and other supplies entered Gaza daily. That was supplemented by fish and produce farmed within the territory.

Even that was barely enough in a crowded territory whose economy has been battered by a 17-year blockade imposed by Israel and Egypt. The blockade, meant to keep Hamas from arming, restricted the flow of goods in and out of Gaza and contributed to widespread poverty and unemployment.

Scott Anderson, the acting director of UNRWA in Gaza, said the low levels of aid since the war started have compounded an existing, pre-war nutrition deficit in the territory.

“You have to remember, this was not a nutrition-rich environment before the war. The resilience was not there,” said Anderson.

WHY IS THERE A DISCREPANCY BETWEEN THE UN AND ISRAEL’S NUMBERS?

Israel and the U.N. count trucks arriving in Gaza differently.

Israel counts every truck it inspects and allows to pass into Gaza, according to Shimon Freedman, a spokesperson for COGAT, the Israeli defense body in charge of Palestinian civilian affairs.

At the Kerem Shalom crossing, once the trucks pass into Gaza, the pallets of aid they are carrying are deposited in a 1-kilometer-long (a half-mile) zone for Palestinian drivers to pick up.

UNRWA only counts the trucks, driven by a Palestinian contractor, returning from that zone, Anderson said.

He also said that sometimes the trucks arriving from Israel are not fully loaded. Palestinian drivers on the Gaza side of the crossing load their trucks fully before passing through the gate — something that could further account for truck count differences.

WHAT IS SLOWING AID TRANSFER?

Getting from Israeli inspection, through the corridor and past the gate into Gaza takes time — and is made more arduous by the way Israel uses the Kerem Shalom crossing, Anderson said.

Since the war began, Israel has kept the crossing partially closed, Anderson said. Palestinian drivers must also wait for the incoming trucks to be unloaded — further narrowing the window of time allowed for pickup.

Aid inspected by Israel sometimes sits overnight, awaiting pickup. The U.N. says it stops all operations at 4:30 p.m. for safety purposes due to a breakdown in public order and airstrikes at night. UNRWA says they used to use local Palestinian police to escort aid convoys, but many refused to continue serving after airstrikes killed at least eight police officers in Rafah. Israel says armed Hamas militants have tried to siphon off aid.

COGAT denied allegations that they restrict the crossing’s hours or limit movement of trucks to pick up aid and blamed the U.N. for the backup, saying the agency does not have enough workers to move aid to warehouses for timely distribution.

WHAT HAPPENS MOVING FORWARD?

Israeli Defense Minister Yoav Gallant said Wednesday night that increasing aid efforts is a top priority.

“We plan to flood Gaza with aid and we are expecting to reach 500 trucks per day,” said Gallant. He did not specify a time frame for reaching that goal.

But even if Israel meets its goal, slowdowns at the crossings and convoy safety concerns may continue to hamper distribution. The U.N. has called for a return to prewar procedures — with additional terminals open and a significant amount of commercial goods, in addition to humanitarian aid, able to pass through.

“Gaza has become very quickly dependent on relief handouts,” Touma said. “The market has been forced to shut. This is not sustainable.”