Economic cycles and development aid: what is the evidence from the past?

This Economic Brief looks at past evidence as to what extent donors' economic cycles have an effect on their aid budgets. It generally finds only a weak correlation of economic growth and aid of OECD donors between 1971 and 2008, and aid was reduced in only about half of all episodes of deep or protracted recessions. The effect usually comes with a time-lag as aid commitments respond faster than aid disbursements. Cuts in aid disbursements might therefore be felt more strongly only in 2010 rather than in 2009, which might somewhat mitigate the negative effects if a strong global recovery in 2010 improved developing countries' growth perspectives and reduced their dependency on aid inflows.