The picture changes, however, if countries are distinguished according to their economic management. Some countries with sound management have received only small amounts of aid and have grown at 2.2 percent per capita. There is no such difference for countries with poor management. Introducing other variables does not change the picture. The effect of aid goes beyond growth.
Aid has a similar effect on infant mortality, but again only if there is good management.
A final lesson from cross-country studies is that, with sound country management, aid works in partnership with private capital. Put another way, assistance to well-managed countries increases private sector confidence and supports important public services. It hardly needs to be said, but in poorly managed countries aid crowds out private investment. In countries with good macroeconomic management and efficient public institutions, projects were 86 percent successful, with much higher rates of return. Case studies of aid effectiveness have come to similar conclusions.