Donor countries are currently scaling up their aid programmes in response to strategies proposed through the Millennium Development Goals. Recent positive research on the impact of foreign development aid has led to increased expectations on the part of donor countries. Research suggests that per capita income growth over the last decade would have been lower in the absence of aid, and also that public sector expenditure on health and education in developing countries would not have been as great without aid inflows. However, there still remain many significant gaps in knowledge on aid allocation and effectiveness. This book addresses a number of these gaps, and provides many new and important analytical insights into aid. Among the topics covered are the interface between aid allocation and perceptions of aid effectiveness, the inter-recipient concentration of aid from non-government organizations, the year-on-year volatility of aid, impacts of aid on public sector fiscal aggregates, and evaluation of the country-level impacts of aid. The book is an essential companion for professionals engaged in aid policy reforms and also for scholars in the areas of development economics, international finance and economics.