Policy, Institutions and Aid Effectiveness in Developing Nations: Literature Revisited

Abstract

This paper is an attempt to investigate policy and institutions aid effectiveness from various contributions made by past scholars. It was found that good policy environment and institutions were good for aid effectiveness. However, aid was also found to enhance good policy especially where past and present policy is bad. This argument was however highly contested by a number of researchers saying that it’s not policy alone that enhances aid effectiveness but other factors like external shocks. Political stability enhances aid effectiveness, though aid in repressive regimes was also found to be as effective to a given degree. The main lesson learned from this research is not to deny the role of policy and institutions in aid effectiveness but to consider its role in a dynamic and broader context.

Keywords: Aid, Effectiveness, policy, countries, institutions