Abstract:
The provision of foreign aid began after the Second World War, when the US marshal plan was
announced in 1947 and involved the provision of funds for the reconstruction of war torn Europe. The
economic objectives of foreign aid are to induce high growth rates in Less Developing Countries
which in turn will generate additional domestic savings and investment. However, there is much
dispute as to whether development assistance to poor countries has been successful in achieving these
objectives. In Ethiopia, an inflow of external resources such as loans and grants has started in the mid
of 1950, the year in which the relationship between the United States and Ethiopia reached a higher
level. As Ethiopia’s economy is characterized by a massive inflow of foreign capital, it is imperative to
review studies conducted on this area. This paper tries to assess the role of foreign aid on economic
growth in Ethiopia
