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This study draws on a rigorous systematic review-to our knowledge the first in this area-to take stock of the literature on aid and democracy. It asks: Does aid-especially democracy aid-have positive impact on democracy? How? What factors most influence its impact? In so doing, it considers studies that explicitly focus on 'democracy aid' as an aggregate category, its subcomponents (e.g. aid to elections), and 'developmental aid'. Overall, the evidence suggests that i) democracy aid generally supports rather than hinders democracy building around the world; ii) aid modalities influence the effectiveness of democracy aid; and iii) democracy aid is more associated with positive impact on democracy than developmental aid, probably because it targets key institutions and agents of democratic change. The review presents a new analytical framework for considering the evidence, bringing together core theories of democratization with work on foreign aid effectiveness. Overall, the evidence is most consistent with institutional and agentbased theories of exogenous democratization, and least consistent with expectations drawn from structural theories that would imply stronger positive impact for developmental aid on democratization.

The "diversity debit" hypothesis – that ethnic diversity has a negative impact on social, economic, and political outcomes – has been widely accepted in the literature. Indeed, with respect to public goods provision – the focus of this article – the conventional wisdom holds that a negative relationship between ethnic heterogeneity and public goods provision is so well-established empirically that future research should abandon examination of whether such a relationship exists and focus instead on why it exists, that is, on the mechanisms underlying a negative relationship. This article challenges the conventional wisdom on empirical grounds. It demonstrates at the sub-national level strong evidence for a "diversity dividend" – that is, a positive relationship between ethnic heterogeneity and some measures of public goods provision, in particular welfare outcomes related to publicly provided goods and services. Building on the literature, the article draws on new analysis at district level for Zambia, using a new dataset compiled by the authors from administrative, budget, and survey data, which cover a broader range of public goods outcomes than previous work, including information on both budgetary and welfare outcomes. The article explores why relationships may differ for sub-national budgetary and welfare outcomes, considering separate models for each. Analysis shows results to be robust across a variety of alternative specifications and models. Given the more nuanced relationship between ethnic diversity and public goods provision documented, the article argues that the key task for future work is not to address why the relationship is negative, but to study under what conditions such direction holds true, and the mechanisms that underlie a diversity dividend. It concludes by considering key explanatory hypotheses against the Zambian data to identify promising areas for such theory development. More broadly, while the diversity debit hypothesis highlights the costs of diversity and could be interpreted as ...

Donors face distinct challenges in operating in fragile states and supporting the building of state capacity. This paper explores one type of assistance - the 'embedding' of highly-skilled staff members within local government agencies - through a unique case study of Finn Church Aid's experience with secondment in Somalia. Building upon FCA's previous work in Somalia, its staff member worked as part of the Transitional Federal Government's Ministry of Constitutional Affairs and Reconciliation to assist in the implementation of the roadmap designed to end transitional governance in the country. Although a number of such initiatives exist, few studies have explored how, why, and whether they work. Drawing on unique access to FCA staff and documents, as well as interviews with Somali stakeholders, donor representatives, and others, the paper explores FCA's experience and impact through this initiative, one way in which a non-state actor has provided tangible, relatively low cost support to a fragile state.

The hypothesis that ethnic diversity has a negative impact on public goods provision is widely accepted. Notably, most work on this issue fails to distinguish adequately between national versus subnational governance. We find that subnational empirical evidence in particular is inconclusive, and speak to this gap with new analysis at the Zambian district level. Results lend strong support to an emerging body of work challenging the 'diversity debit' hypothesis: we find no clear evidence of a negative impact but instead a robust positive association with key welfare outcomes. Contra the conventional wisdom, future work should explore mechanisms underlying the 'diversity dividend' now suggested in multiple subnational analyses.

Countering recent rises in many countries of inequality in income and wealth is widely recognized as a major development challenge. This is so from an ethical perspective and because greater inequality is perceived to be detrimental to key development aims. Still, an informed debate on the effects of inequality requires clear evidence. This review contributes to the literature by taking stock and providing an overview of current knowledge of the impact of income inequality on three important outcomes: economic growth, health and education as two dimensions of human development, and governance, with a focus on democracy. Drawing on the insights from different disciplines and considering recent work, it reveals that existing evidence provides somewhat mixed results and argues for a need for further in-depth empirical work. It also points to explanations for the lack of consensus embedded in data quality and availability, measurement issues, and the shortcomings of the different methods employed. Finally, we point to promising future research avenues relying on experimental work for micro level analysis, more region- and country-specific studies, and reiterate the need for improvements in the availability and reliability of data.