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Foreign aid is publicly motivated by a moral obligation to help the poor and develop \nunderdeveloped countries. Donors have invested more than US$2.3 trillion in foreign aid, \nbut despite this significant investment, 3 billion people are still living on less than $2 a day, \n840 million are hungry, 10 million children die from preventable disease, and 1 billion \nadults are illiterate. \nThis study focuses on the impact of foreign aid on economic growth and development of \nunderdeveloped countries. It was found that many variables influence growth and \ndevelopment and that cross-country regression analysis is an inappropriate method to \nmeasure the effectiveness of aid. The methodology is too generalist, and treats foreign aid \nas a homogenous entity that works equally in all countries in all types of environment and \nacross all times. There is an urgent need to develop a new methodology for measuring the \neffectiveness of foreign aid.
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