Foreign aid and poverty in Bosnia and Herzegovina: Targeting simulations and policy implications

Though the current aid program has reached many of the poor, it has also excluded a sizable part of the neediest. By using simple proxy means tests approach we show that improving targeting accuracy in the aid delivery process can yield improved coverage and reduced leakage and can have a sizable impact in terms of poverty reduction. We focus on some variables that are relevant in Bosnia and Herzegovina. The data come from a household survey commissioned by the World Bank that covers about 7000 households and is the first of its kind in the country.