allocation was to give aid to countries based on the number of people they hosted living on less than $2 a day. Sub-Saharan Africa would get 17 percent and East Asia 31 percent. If our criterion was to distribute aid to countries hosting those living under one dollar a day, Sub-Saharan Africa would get 26 percent of aid flows and East Asia would get 23 percent. If we weight by the dollar poverty gap index, SSA would get 33 percent and East Asia 20 percent.<sup>76</sup> Finally, if we apportioned aid according to population living in countries in which governments contracted zero in private external long-term loan commitments in 2002, 47 percent of aid would go to Africa and 15 percent would go to East Asia.

If one is a strong believer in the impact of institutional and policy factors on aid effectiveness, one’s optimal aid allocation strategies might also look markedly different from current levels. Imagine our only criterion for per capita aid allocation (beyond developing country status) was macroeconomic management as measured by average inflation being below 10 percent 2000-2003. Nine percent of aid flows would go to Africa and 43 percent would go to East Asia. If our only criterion for per capita aid allocation was institutional strength as measured by the proportion of managers surveyed who ranked corruption as a major constraint to doing business in a country being below 30 percent 2000-2003, 0.3 percent of aid would flow to Africa and 75 percent of aid would go to East Asia.

One attempt to combine the two needs and abilities approaches appear to weight aid flows towards Asia. Taking policy-aid interaction coefficients from a growth regression and mapping these onto a growth to poverty reduction coefficient based on current national incomes and income distributions, ‘correct’ allocation of aid would increase the numbers lifted out of poverty each year through the use of aid from 30 million to 80 million, and 40% of the change would be accounted for by increased aid flows to India and China.<sup>77</sup> However, given the fragility of aid effectiveness results and their excess concentration on just one outcome, we really don’t (can’t?) have a strongly-based empirical justification for any particular country-based aid allocation. Again, there is no one answer to the question ‘have we got better at giving ‘good’ aid. The World Bank, for example, has not got any better at giving aid to countries with good governance scores, a potentially worrying finding from the point of view of outcome effectiveness but potentially sensible from the point of view of equity.<sup>78</sup> Even if we agree on a particular outcome we wish to maximize, the most efficient allocation of aid will depend on the parameters as to what that aid can look like. It will also depend crucially on a host of unknowns as to payoffs from different types of support provided through different mechanisms to different actors at the local, national, regional or global level.

Nonetheless, the results may suggest that an increase in aid that looks the same as today’s flows might have a limited impact on the countries that we wish to help the most –that for aid increases to have the maximum effect, they need to be more creatively used. This confirms what we have always known –giving aid to a kleptocracy will likely do little good. Giving that same aid to a cross-country effort to control river blindness ably 14