Aid Effectiveness—Opening the Black Box

This paper examines the causality chain linking aid flows to development outcomes. It argues that many of the questions policymakers and economists would like data to answer simply cannot be answered due to the complexity and "noise" along links in the chain, and the problem of attribution. It then examines what is known about aid effectiveness along different links in the causality chain. Finally, it turns to recent trends in the way aid is delivered and the new model that appears to be emerging.