Long Run Effects of Aid: Forecasts and Evidence from Sierra Leone

We evaluate the long-run effects of a decentralized approach to economic development, called community driven development (CDD), a prominent strategy for delivering foreign aid. Notably, we revisit a randomized CDD program in Sierra Leone 11 years after launch. We estimate large persistent gains in local public goods and market activity, and modest positive effects on institutions. There is suggestive evidence that CDD slightly improved communities’ response to the 2014 Ebola epidemic. We compare estimates to the forecasts of experts from Sierra Leone and abroad, working in policy and academia, and find that local policymakers are overly optimistic about CDD’s effectiveness.