ABSTRACT
There are numerous arguments for giving foreign aid to less-developed countries. Two views dominate (White 1974): In the 1960s the "optimists" (e.g., Chenery and Strout 1966; Fei and Ranis 1968) hoped that with the assistance of the industrial states the Third World would be able to develop rather quickly so that the major economic problems (food production and provision, literacy, industrial development) could be solved. However, in the 1970s and 1980s, the "pessimists" (e.g., Bauer 1971, 1984; Griffin 1970; Griffin and Enos 1970; and recently, Erler 1984) gained more and more ground querying the positive relationship between foreign aid and growth.
