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Aid Effectiveness and Donor Motives

Author

Listed:
  • Dreher, Axel
  • Lang, Valentin
  • Reinsberg, Bernhard

Abstract

A vast literature evaluates the effectiveness of development aid, often reaching sobering conclusions. We argue that a key shortcoming of this literature is the focus on a narrow concept of effectiveness—mostly economic growth—that does not match the kind of effectiveness that aid donors actually aim at. To determine actual donor motives, we first survey the literature on aid allocation and identify a large set of motives that is common to many donors. We then employ this set of donor motives for compiling a survey of the aid effectiveness literature by donor motive. The literature shows that while aid has a moderate effect on economic development at best, it seems effective in achieving many of the other effects primarily intended by aid donors. We conclude by speculating that future research on aid effectiveness will be more likely to identify significant effects of aid when taking donor motives into account.

Suggested Citation

  • Dreher, Axel & Lang, Valentin & Reinsberg, Bernhard, 2023. "Aid Effectiveness and Donor Motives," CEPR Discussion Papers 18417, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:18417
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    Keywords

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    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid

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