How much aid should be provided to middle-income countries (MICs)? And what should it be spent on? These are among the most debated issues in development cooperation, particularly in the European Union (EU). This paper seeks to provide evidence and ideas to help aid allocation decisions for the EC institutions and EU member states. It is ordered as follows:
• first, introduces the topic in the context of evolving EU development policy
• second, reviews definitions and membership of income-related country groupings
• third, describes the evolution of aid flows to country groups
• fourth, assembles the arguments for and against aid to middle-income countries
• fifth, concludes with two broad recommendations on how to conceptualise aid to MICs for its effective use in achieving development results.