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CGD’s research on aid effectiveness focuses on the policies and practices of bilateral and multilateral donors. Combining strong research credentials and high-level government experience, our experts analyze existing programs, monitor donor innovations, and design innovative approaches to deliver more effective aid. CGD research also provides insight into how policies ranging from trade to migration to investment undermine or complement foreign aid policies.
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The Commitment to Development Index of the Center for Global Development rates 21 rich countries on the “development-friendliness” of their policies. It is revised and updated annually. In the 2004 edition, the component on foreign assistance combines quantitative and qualitative measures of official aid, and of fiscal policies that support private charitable giving.
Recent research offers differing assessments of the overall, worldwide effect of foreign aid on economic growth in the countries that receive aid. To understand these differences, we re-analyze the same data and same regressions used in the three most influential aid-growth studies. In all three, increases in aid have been followed on average by modest increases in investment and growth. The most plausible explanation is that aid causes some degree of growth in recipient countries, though the magnitude of this relationship is modest, varies greatly across recipients, and diminishes at high levels of aid.
Nigeria is currently classified by the World Bank as a ‘blend’ country, making it the poorest country in the world that does not have ‘IDA-only’ status. This paper uses the World Bank’s own IDA eligibility criteria to assess whether Nigeria has a case for reclassification.
This paper argues that regional public goods in developing countries are under-funded despite their potentially high rates of return compared to traditional country-focused investments. In Africa the under-funding of regional public goods is primarily a political and institutional challenge to be met by the countries in this region. But the donor community ought to consider the opportunity cost – for development progress itself, in Africa and elsewhere – of its relative neglect, and explore changes in the aid architecture that would encourage more attention to regional goods.
In the face of continuing development challenges in the world's poorest countries, there have been new calls throughout the donor community to increase the volume of development aid. Equal attention is needed to reform of the aid business itself, that is, the practices and processes and procedures and politics of aid. This paper sets out the shortcomings of that business on which new research has recently shed light, but which have not been adequately or explicitly incorporated into the donor community's reform agenda. It outlines seven of the worst "sins" or failings of donors, including impatience with institution building, collusion and coordination failures, failure to evaluate the results of their support, and financing that is volatile and unpredictable. It suggests possible short-term practical fixes and notes the need ultimately for more ambitious and structural changes in the overall aid architecture.
This paper considers what role pull instruments or challenge programs (such as the World Bank's Poverty Reduction Support Credits or the United States' Millennium Challenge Account) could play within the overall framework of foreign aid, asking how they could be designed to function as effective and efficient incentive instruments and how they could best complement other aid modalities.
Time to put to rest the stale debate over whether the World Bank should disburse grants or loans to the world’s poorest countries. It is critical that the Bank provide more of its funding as grants, but in a more rational manner than has been the case to date. A third Bank window should distribute grants – and grants only – to very poor countries, for example, with incomes below $500 per capita. Shifting to grants-only for the very poorest countries would ensure they never again find themselves with unpayable debt burdens, and would allow them to re-invest resources into their own economies rather than repay the Bank.