A bulk of the literature on foreign aid is centered on a simple question: Does it work?
The assumption of aid having a positive impact on growth remained scientifically almost unchallenged during the 1950s and 1960s. Since the late 1960s, empirical research has dealt with the aid-growth relationship in detail, but the results have been inconclusive. Even the reverse causality (i.e. growth leading to higher ODA flows) cannot be ruled out, because some donors may tend to reward improvements in economic performance. Relying on the existing data, scholars and aid practitioners have roughly three positions with regard to the answer of this question: yes, aid works and it will work better if the amount of aid is increased; no, it doesn’t work, it should be seriously reformed or even abolished completely; and it can work under certain circumstances. However, in this article we focused only on “yes” and “no” and left the third position to be discussed later.