Despite decades of research on foreign aid, there is little to no consensus on foreign aid’s effect on growth. While most in the field study recipient country characteristics, such as institutional quality, this paper also breaks down foreign aid by donor characteristics, specifically by bilateral and multilateral donors. Since about 75% of foreign aid is bilateral, my bilateral findings are in line with previous literature that finds high institutional quality key (Burnside and Dollar 2000; 2004), but I find that multilateral aid works best in low-income countries with poor policy environments, due, perhaps, to lacking political goals of donor countries.
Jeffrey, Scott B.
"Is All Foreign Aid the Same? : An Empirical Comparison of the Effect of Multilateral and Bilateral Aid on Growth,"
Undergraduate Economic Review:
1, Article 3.
Available at: http://digitalcommons.iwu.edu/uer/vol12/iss1/3