Aygun Aliyeva

Type of the article: Research Article

Abstract
The effectiveness of international development assistance in promoting sustainable development remains a central question for the management of multilateral aid and public governance as the 2030 Agenda enters its final years. This paper examines the relationship between aid effectiveness, measured by the World Bank’s Country Policy and Institutional Assessment (CPIA), and the achievement of the Sustainable Development Goals (SDGs) across 76 IDA-eligible countries over the period 2005–2023. Using two-way fixed-effects panel estimations with clustered standard errors, the analysis covers five individual SDG indicators (poverty, child mortality, primary education, electricity access, and employment) and the composite SDG Index. The results show that the overall CPIA score is significantly associated with poverty reduction in low-income countries (β = −12.0, p < 0.10), while its effect on the composite SDG Index is statistically insignificant within countries, despite a strong cross-sectional association. A cluster decomposition reveals that structural policies drive improvements in child mortality and electricity access, while economic management supports employment outcomes. Sub-sample analysis demonstrates pronounced heterogeneity: the marginal return to institutional quality is highest in the poorest economies and shifts toward health and labor market outcomes as countries move up the income ladder. GDP per capita remains the dominant predictor across all SDG dimensions, confirming that aid effectiveness complements rather than substitutes for domestic economic capacity. These findings support a differentiated management approach to development assistance that targets specific governance dimensions to specific SDG outcomes and prioritizes institutional strengthening in the most resource-constrained settings.