Despite the lack of robust positive correlation between aid and growth, the economists and policy makers shift to focus on the direct impact of foreign aid on poverty and income inequality in recipient countries. Among the studies that focus on the impact of aid on poverty are Collier and Dollar (2002), Lensink and White (2002),
Kraay and Raddatz (2007) and Bahmani-Oskooeeand Ayolola (2009). However, poor economic performance and
disappointing poverty reduction experience in major aid recipient contrasted with nations that have managed to
achieve significant progress without foreign aid. Currently only a few empirical studies have been performed
looking at the impact of foreign aid on inequality (Bourguignon et al. 2008; Calderon et al. 2009; Shaifullah
2011).