Global: An aid institutions paradox?

Does foreign aid help develop public institutions and state capacity in developing countries? In this Working Paper, the authors suggest that despite recent calls for increased aid to poor countries by the international community, there may be an aid-institutions paradox. While donor intentions may be sincere, the authors conclude that it is possible that aid could undermine long-term institutional development, particularly in sub-Saharan Africa. By reviewing the evidence of the potentially negative effects of aid dependence on state institutions, the authors provide a thorough analysis of the institutional effects of aid.