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Foreign Aid Literature Review

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2. Chapter Two: Literature Review

Related works that could serve as a background for the analysis of the paper under consideration could be reviewed in three major parts: effectiveness of foreign Aid, measures of Aid effectiveness and donors development policy objectives.
2.1. Effectiveness of Foreign Aid
The success or failure of foreign aid in developing countries has won a wide range of attention and exhibited a huge controversy. The whole work and accompanying results of foreign aid effectiveness vs economic growth has become a “political football” Easterly and Levine (2003) . The direct impact of aid or its contribution along other factors (Aid_ saving, Aid_ investment, Aid_ productivity, Aid _ Trade) to growth has been described as
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Measures of Human Development Indicators
Related works dealing with measures of aid effectiveness or evaluation of progress are not as large as the ones with the impact of foreign aid in poor countries. Besides they are quite different in type and size of coverage too. The latter is mainly a survey and post result oriented type while the former one relies on samples and various econometric measures to analyze and evaluate foreign aid effectiveness vis-à-vis specific variables. Nevertheless we will review the existing works dealing with human development indicators, Millennium Development Goal indicators (MDGs), and Paris declaration of progress indicators.
2.2.1. Human Development indicators and
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Among these; coordination and procedures applied in aid provision and management has been proved to a hindrance to the overall working of aid. In order to overcome this problem, donors and recipient countries have designed a frame work via which all parties could exercise in an accountable and transparent way. Hence after the commitments by donors to provide an increased aid in the aim to enable developing countries meet the MDGs, the stakeholders (Donors, recipients, multilateral and bilateral development institutions) have agreed to abide to new a frame work in delivering and managing aid. The new partnership is thus aimed to improve the existing quality of aid and its impact on development undertakings in recipient countries. Paris declaration (2005) is a result of successive high level forums in Rome (2003) and Marrakesh (2004). The alliance in terms of the PD has been later reinforced commitments through bilateral and multilateral negations among the stakeholders (OECD 2008) . The declaration consists of five principles with which aid effectiveness is evaluated: Ownership, harmonization, Alignment, result and Mutual accountability . Each of those principle together constitute 12

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