This paper assesses the effectiveness of foreign aid in reducing poverty through its impact on human development indicators. The results show that NGO aid reduces infant mortality and does so more effectively than official bilateral aid. The impact on illiteracy is less significant. Evidence of a substitution effect of foreign aid reducing government efforts in achieving developmental goals was mixed. Overall, the study concluded that foreign aid is effective in reducing poverty through its impact on human development indicators, particularly in regards to infant mortality. However, further research is needed to fully understand the effects of foreign aid on poverty reduction.

This paper has provided an overview of the literature on foreign aid and poverty reduction. It has highlighted the importance of considering both the sources and recipients of aid and their respective policies in determining the effectiveness of foreign aid for poverty reduction. The literature has found that aid is likely to be more effective in reducing poverty when it is targeted to countries with good policies, such as those with strong institutions, a well-functioning democracy, and market-oriented reforms. The paper also discussed the role of foreign aid in promoting economic growth, and how the effectiveness of foreign aid may be adversely affected by corruption or inefficient economic policies. Overall, the literature suggests that foreign aid can play a role in poverty reduction and economic growth, but it is not a panacea and its effectiveness depends on the policies of both donors and recipients.

This research paper examines the impact of foreign aid on poverty. After controlling for average income, the results suggest that foreign aid has a significant poverty-reducing effect. This is evident in the poverty rate, poverty gap index and squared poverty gap index. Furthermore, the composition of aid matters, with grants and multilateral aid being more effective at reducing poverty than bilateral aid and loans. In conclusion, the results of this research paper suggest that foreign aid can have a positive effect on poverty when properly managed.

This study looks at the degree of correlation between foreign aid and poverty reduction, and uses the method of Granger causality to determine whether aid flows impact poverty, poverty influences aid flows, or whether there is a simultaneous causality between the two variables. The results show that there are no causal relationships in some of the sub-samples, but multiple relationships are found in others. This suggests that while foreign aid can help reduce poverty levels in some cases, it is not a guaranteed solution. More research is needed to understand the full effect of foreign aid on poverty reduction.