Effectiveness of Foreign Aid in Water Supply and Sanitation Sector: A Comprehensive Review of Literature

Abstract

This study reviews the research studies conducted to estimate the impact of foreign aid on access to improved water sources and sanitation facilities. More than half of the studies show a positive impact of foreign aid on the water supply and sanitation (WSS) sector. Due to improved econometric techniques and better availability of data, increase in number of studies have helped to analyze the impact of foreign aid on WSS and have shown that foreign aid to WSS is effective only under certain circumstances. As the literature on foreign aid effectiveness is still at the nascent stage, there are many questions to further the research in this area. These questions include exploring reasons why aid to WSS is more effective in rural areas as compared to urban areas and what role local politicians can play in rural areas? Whether aid money compliments or substitutes the local expenditures?