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D 4.1 Report on the impact of aid on poverty

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The answer to the question of whether foreign aid is effective in improving the lives of poor people has many dimensions that go beyond purely monetary considerations. Consisting of four different research programs, this task addresses some of these dimensions. Over the last decades, the Millennium Development Goals (MDGs) have arguably been the most influential benchmark for assessing aid effectiveness. In the first program, we investigate the impact of aid on MDG-related education and health indicators. Employing a cross-country panel data approach, we obtain mixed evidence: While aid for health has been associated with reduced child and maternal mortality since the early 2000s, we find no significant relationship between aid for education and either primary enrolment or primary completion. Mortality and primary enrolment are also among the indicators considered in the second program. By means of a comparative case study for Benin and Togo, two countries with different trajectories of foreign aid inflows, this research adds to the evidence that aid has the potential to improve health conditions in recipient countries. The third program takes a grassroots view and studies the specific women empowerment approaches of EU-funded organisations in Vietnam, Mexico and Botswana in the context of urban poverty alleviation. It uses participatory methods such as photo-interviews. One important common result of these empowerment projects is that women learn to perceive themselves as agents not victims. Finally, we examine the link between aid and conflict. The absence of violent conflict is a fundamental pre-condition of successful poverty alleviation. Again based on cross-country panel data, we find no evidence that development aid prevents wars in general. However, aid appears to have a stabilizing effect in post-war situations by enhancing economic growth.