Lack of foreign aid effectiveness in developing countries between a hammer and an anvil

Abstract

This article examines reasons for the ineffectiveness of foreign aid interventions in developing countries, using the examples of Yemen, Egypt and Jordan. It starts with a review of two contradictory theories used to explain foreign aid ineffectiveness: the public interest perspective (PIP) and the public choice perspective (PCP). On the basis of the PCP, this article shows that deficiencies are locked within a vicious circle of a poor policy and institutional environments in developing countries and donors' self-interest. The article ends by proposing a third explanation of foreign aid ineffectiveness that goes beyond the scope of the PCP.