WHETHER foreign aid helps poor countries grow is a matter of dispute. Although there is evidence that aid has a positive effect on social indicators such as infant mortality and primary school enrollments, its effectiveness on growth is an unresolved matter among economists. “It is difficult to discern any systematic effect of aid on growth,” Rajan and Subramanian (2008) concluded, for example, while Arndt, Jones, and Tarp (2009) found that “aid has a positive and statistically causal effect on growth over the long run.”