The effectiveness of foreign aid and its impact on economic growth is one of the hotly debated and controversial issues in the growth literature.  The empirical studies are inconclusive and ambiguous at best.  Michalopoulos and Sukhatme (1989) conclude that the cross-country evidence is ambiguous, and White (1992a) asserts that little is known about the macroeconomic impacts of aid. White (1992b) also argues that there is no agreement as to the positive or negative relationship between aid and growth.  In their survey of the aid literature Hansen and Tarp (1999) found that 25 out of 41 studies showed a negative and significant relationship between aid and domestic savings, while only one study found a positive and significant relationship between aid and savings.  The remaining 15 studies were not conclusive.             Although there is a huge body of literature on the relationship between aid and economic growth using all kinds of econometric techniques, little work is done on whether these econometric results are robust to changes in critical parameters included in the model or changes in model specifications. The empirical evidence that foreign aid helps or hurts economic growth remains inconclusive despite the intuitive reasoning of both proponents and opponents of foreign aid.  Whatever cogent theoretical reasons may be given in support of one perspective or another, the empirical results do not clarify the issue one way or the other.  The ambiguity and the inconclusiveness of the empirical results demands a new approach. Using a new robust approach and a novel econometric practice, this paper adds a new dimension into the current debate and tries to address the shortcomings of the literature and the nature of the conflicting findings in the literature.