Aid effectiveness disputed<FN>This paper is reproduced with the kind permission of Routledge. It is forthcoming as Chapter 4 in Finn Tarp (ed.) Foreign Aid and Development: Lessons Learnt and Directions for the Future, London: Routledge. Sherman Robinson provided extensive comments and drafting suggestions on earlier versions. They are gratefully acknowledged. The same goes for discussions with Irma Adelman and Erik Thorbecke among many others, who helped shape the approach adopted. Useful comments were also received from Gerry Helleiner and participants in four seminars at the University of California (Berkeley), Cornell University, the International Food Policy Research Institute (IFPRI), and the University of Reading, UK. Research assistance provided by Steen Asmussen, Henning Tarp Jensen, and Søren Vikkelsø is appreciated. The usual caveats apply. </FN>

There is a widespread perception among academic researchers and aid practitioners alike that empirical cross-country analysis fails to find any significant link between aid flows and growth, and that aid is successful only when associated with good policies in the recipient countries. These positions do not stand up to careful scrutiny of existing studies. In this paper, we offer a re-examination of the literature on the aid–savings, aid–investment, and aid–growth relationships, and a comparative appraisal of more recent research contributions. Using an analytic framework for evaluating the empirical work, a coherent and positive picture of the aid–growth link emerges. There is a robust aid–growth link even in countries hampered by an unfavourable policy environment. Copyright © 2000 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]