How important is foreign aid in fostering economic growth in developing countries?... (This book) investigates this issue by disaggregating foreign aid by sector rather than treating it as an aggregate amount. Aid can be allocated to a recipient's production sectors..., economic infrastructure..., or social sectors. This book differentiates among various channels through which each of these three categories of foreign aid affects economic growth. The findings suggest that aid to production sectors and economic infrastructure contributes to economic growth by increasing domestic investment.Aid to social sectors, however, does not appear to have a significant impact on schooling and economic growth. This study also assesses the degree to which the quality of democratic governance in a recipient country influences foreign aid's effectiveness and finds that democracy is no guarantee of aid effectiveness. Although further research into the question is necessary, this book suggests that aid targeted to increasing domestic investment might be an effective means of fostering economic growth in less developed countries. -- Book Jacket.