Even after half a century of work and much criticism, the driving importance of foreign aid shows no sign of abating. Widespread and acute poverty still ravages many countries of the world, and the understanding of how aid affects the economies of the recipient countries is still far from perfect. These two factors alone warrant the examination offered in this book.The contents of this work try to bring together many strands of the literature, many of which are new and have a bearing on the subject of aid but which have as yet not found their way into the mainstream of the literature. This volume takes a broad survey and also provides a more specific treatment of elements of aid that have yet to be explored in the current literature.This book can serve as both a reference work as well as a research monograph and should be of use for students, as well as for researchers and policy makers.

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1. Introduction.- 2. Foreign Aid in the Twenty-First Century.- 3. Aid Allocation and Donor Motives.- 1 On the determinants of aid.- 2 Brief review of empirical literature.- 3 Methodology.- 4 Data.- 5 Results: an overview.- 6 Sensitivity analysis.- 7 Conclusion.- 4. Aid, Policy and Growth: A Sensitivity Analysis.- 1 A selective literature review.- 2 Methodology.- 3 Data.- 4 Results: an overview.- 5 Sensitivity analysis.- 6 Conclusion.- 5. Aid, Policies and Growth: Implications of Simultaneity.- 1 Simultaneous equations model of aid, policies and growth.- 2 The reduced form multipliers.- 6. Estimation Results.- 1 Introduction.- 2 Empirical structural form model.- 3 Empirical restricted reduced form model.- 4 Stability analysis.- 5 Estimation procedure.- 6 Structural form estimates.- 7 Reduced form estimates.- 8 Conclusion.- 7. Effects of Exogenous Shocks: One-Period Analysis.- 1 The impact multipliers.- 2 Growth.- 3 Investment.- 4 Life expectancy.- 5 Infant mortality rate.- 6 Output per capita.- 7 Consumption.- 8. Implications of Aid and Policy Regime Shifts: Some Simulation Results.- 1 The simulation strategy.- 2 Growth rate.- 3 Consumption and investment behaviour.- 4 Output per capita.- 9. Summing Up and Lessons.- Appendices.- Data appendix I.- Data appendix II.- Simulation results on life expectancy.- Simulation results on infant mortality.- References.