Foreign Aid

This chapter reviews scholarship on the political economy of foreign aid, identifies key gaps in the current literature, and offers suggestions for bridging across dividing lines to advance future research agendas. It highlights potential synergies between the study of foreign aid allocation and aid effectiveness. The analysis draws attention to the need to synthesize across studies of micro-level and macro-level outcomes to understand the full political and economic impacts of aid. Reviewing the literature on differences across types of aid donors shows the need to better understand the relationship between democratic and non-democratic donors and to further study optimal design of development institutions to help meet global challenges addressed through foreign aid, such as climate change and pandemic disease.