Abstract

It is well demonstrated in the literature that education aid does not necessary produce the expected results in developing countries. The current paper explores the role of country level inefficiencies in the relationship between aid and education outcomes. Applying a Stochastic Frontier approach, it shows that the efficiency in education aid utilization varies across developing countries and seems to be positively correlated with good governance, political stability, and stronger national commitment to finance education. These findings imply that improving aid effectiveness requires donors to use innovative modalities for aid allocation that will take into consideration recipient countries’ needs and their ability to translate aid into educational outcomes while contributing to addressing inefficiency issues.

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