As the numbers are published on progress towards the MDGs, many people are asking about the links between rich country aid programmes and improved outcomes for poor people. Watch as world leaders emerge from the big MDG summit in New York and glide seamlessly from a discussion of poverty to a confident declaration that improving statistics on child health/maternal health/income poverty/access to water are a sign that aid is working. Meanwhile the usual band of sceptics will latch onto any negative stat and parade it as proof that aid is useless and that, in general, all is doomed. In reality, though, we don't have strong enough evidence to make either of these claims.



There are two broad and annoyingly general statements that I do think we can make sensibly about aid and the MDGs. Firstly, there is a large group of countries for whom aid is almost entirely irrelevant. The strong progress against poverty in China and Brazil (and most of Latin America), and the fairly good progress in India, for example, have next to nothing to do with aid. We can say this with confidence because aid to these countries is miniscule as a percentage of their GDP, so while we could debate for ages what the factors of progress are (presumably a combination of rising wealth and sensible spending decisions at a national level) we know that aid is not one of them.



Notably, it is in these countries where progress measured in numbers of people is greatest, simply because these countries are very populous. So progress here means global progress – they are the motor of the MDGs, and aid doesn't matter (when aid is defined as a transfer of money – other forms of international support and cooperation may have been relevant).



But there is a second group of countries which are highly dependent on aid – smaller, poorer countries, mostly in Africa, some in Asia and a handful in Latin America. Our second and even more annoyingly general statement is that in these countries aid has certainly been very relevant... we just don't know in what way. Sorry.



How do we know that aid is very relevant? Simply because aid is such a large part of the budget and therefore also of the social/political/economic decision making processes. In countries like Burundi (where aid is about 50% of GNI), Guinea Bissau (35%), Mozambique (26%) and Sierra Leone (33%) it would be impossible for aid not to be enormously important.



Progress in these countries has not been as obvious as in the first group of countries, although examples of countries where no progress has been made are few and far between. But has aid been a positive factor, or a negative one? It is very difficult to make general statements about the relationship between aid and (lack of) progress. Where progress is strong, is it because of high levels of aid, or in spite of them? Where progress is weak, the same question applies. Even if there was a clear graph showing that more/less aid leads to more/less progress (which there doesn't seem to be) it wouldn't help much because it would tell us little about causality, the holy and elusive grail of statistical analysis.



To know if aid is working, we need to get to know the political aspects of the specific recipient country, and the particulars of the aid modalities. In some, conditions attached to aid by donors (which have undermined productive capacity leading to less food and fewer jobs) or long term aid dependence (that has so undermined political capacity and accountability that the state is now less able than previously to deliver public goods) mean that, overall, aid may have had a negative effect on poverty reduction, despite the positive stories of change we may read about in donor annual reports. But in others aid has been managed much better, with fewer negative consequences, allowing its positive impacts to dominate – real changes in the lives of poor people.



It all depends on the specifics. Apart from my two very broad-brush groups there are a lot of countries in between where I'm afraid we have to be even more circumspect. So apologies to all those who wanted a neat graph showing how aid helps/hinders poverty reduction. There isn't one.

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Data summary

The big aid donors 2007 figures. Click heading to sort Country or Area Aid as % of gross national income Aid, $m Australia 0.32 2668.52 Austria 0.50 1808.46 Belgium 0.43 1952.83 Canada 0.29 4079.69 Denmark 0.81 2562.23 Finland 0.39 981.34 France 0.38 9883.59 Germany 0.37 12290.7 Greece 0.16 500.82 Ireland 0.55 1192.15 Italy 0.19 3970.62 Japan 0.17 7678.95 Luxembourg 0.91 375.53 Netherlands 0.81 6224.26 New Zealand 0.27 319.8 Norway 0.95 3728.02 Portugal 0.22 470.54 Spain 0.37 5139.8 Sweden 0.93 4338.94 Switzerland 0.37 1689.16 United Kingdom 0.36 9848.54 United States 0.16 21786.9