Since the first Oversea Development Program (ODA) was launched in 1950s, the question of the effectiveness of foreign aid remains a controversial issue. Many research papers examined the relationship between economic growth and foreign aid, but mix results were reported in the development literature. However, there has been less research investigating the impact of the aid inflow on the Human Development Indicators (HIDs). This is surprisingly; because many donors have been changing the approach to oversea assistance from stimulating economic growth to reducing poverty. If the purpose of donors is to reach the MDGs, so assessing the effectiveness of aid should focus on the relationship between foreign aid and poverty reduction.