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| Scaling-up foreign aid: Will the 'Big Push' work? |
Image: isafmedia / flickr16 August 2010International donors are substantially scaling up aid. At the same time, they have reservations over how much aid recipient countries can use effectively. Such concerns are supported by the aid effectiveness literature which finds that there are limits to the amounts of aid recipients can efficiently absorb. This paper demonstrates that a 'big push' in foreign aid will not lead to diminishing returns as long as donors get the inter-country allocation of aid right. This is true even if donors provide aid at levels equal to the well known target of 0.7 per cent of their Gross National Income.