Foreign aid has evolved significantly since the Second World War in response to a dramatically changing global political and economic context. This article (a) reviews this process and associated trends in the volume and distribution of foreign aid; (b) reviews the goals, principles and institutions of the aid system; and (c) discusses whether aid has been effective. While much of the original optimism about the impact of foreign aid needed modification, there is solid evidence that aid has indeed helped further growth and poverty reduction.
KeywordsBretton Woods agreement Charity Chenery, H. Corruption Dependency Development Assistance Committee (DAC) Dutch disease Economic development Foreign aid Foreign direct investment Harrod-Domar model International Development Association (IDA) International public goods Krueger, A. Marshall Plan Micro-macro paradox Millennium Challenge Account (MCA) Millennium Development Goals (MDG) Non-governmental organizations (NGOs) Official Development Assistance (ODA) Poverty Rent-seeking Washington consensus World Bank
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