The past 30 years have witnessed a massive outpouring of studies on the effectiveness of foreign aid. The topic has been a central and recurring theme with which many economists, subscribing to the different paradigms of development thinking discussed in Chapter 1, have grappled. The question of whether aid works or not has been approached from different methodological and ideological perspectives. More specifically: (i) the impact of aid has been evaluated at both the micro-and macroeconomic level; (ii) crosscountry as well as single-country case studies have been relied on; and (iii) aid effectiveness research includes broad surveys of a qualitative and inter-disciplinary nature as well as quantitative analyses. A comprehensive survey of the aid effectiveness literature is not feasible in this chapter.1 Instead we will address a particularly thorny issue that has preoccupied aid protagonists and aid critics alike, namely the macroeconomic impact of aid on growth.