L. Chauvet and P. Collier, Centre for the Study of African Economies, Oxford University, 2004. This paper attempts to quantify some neglected potential effects of aid, thereby improving overall guidance on aid effectiveness. It is thus in the tradition of the research on ‘poverty efficient’ uses of aid, the core idea of which is that since aid is scarce, donor agencies have a responsibility to use it as effectively as possible to reduce poverty.