The controversy surrounding the effectiveness or counter-productivity of foreign aid is one of the great issues facing the world today. The first edition arose from a study conducted by the World Bank and the International Monetary Fund, concerning the effectiveness of aid. Now in this thoroughly revised and updated second edition, Robert Cassen incorporates the research and debate in this area since 1986. He has updated the text and tables, added a section to each chapter reviewing recent findings, and removed some of the highly technical parts of the text, making this edition accessible to a wider audience of students approaching the topic for the first time as well as specialists in development economics. The analysis reveals that most aid succeeds in terms of its own objectives and obtains a reasonable rate of return. At the same time, the report analyzes the failings of aid projects, compares these failings with other forms of private and public investment, and proposes measures for improving aid effectiveness.