Aid Effectiveness – Opening the Black Box

This paper by François Bourguignon and Mark Sundberg, both from the World Bank, examines the causality chain between external aid to final development outcomes, which the authors argue has been largely ignored. It argues that many of the questions that policy makers and economists would like to squeeze data into answering simply cannot be answered due to the complexity and ‘noise’ along links in the chain, and hence the problem of attribution. It then examines what is known about aid effectiveness along different links in the causality chain. Finally, it turns to recent trends in the way aid is delivered and the new model that appears to be emerging.

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