Development aid – what do research say about its effects and potential?

02 June, 2021

In Ekonomisk Debatt, SITE researcher Anders Olofsgård sheds light into what we can learn about the effectiveness of development aid from literatures at the macro, micro and meso- levels. What are we talking about when we talk about development aid?

In a recent article, published in Ekonomisk Debatt, SITE's Deputy director Anders Olofsgård discuss what we can learn about the effectiveness of development aid from literatures at the macro, micro and meso- levels.

Anders explains that at the macro and meso-level, the focus lies on the impact of aid on broad measures of welfare associated with economic activity and growth, whereas the discussion of the micro-level literature focuses on how experimental approaches can contribute to our understanding of how to best spend the aid budget.

My reading of the literature at the macro-side suggests that development aid probably has a rather small but positive impact on economic development, but it depends on how and why aid is disbursed, what is included in the measure of development aid, and what governments donor countries partner with.

Anders Olofsgård

Deputy Director and Associate Professor at SITE

Anders further highlights that effectiveness can be improved by evidence-based aid policy based on the insights from the experimental literature at the micro-level, giving some guidance on what works and what doesn’t when it comes to investments across different welfare sectors.