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Within the development aid community decisions regarding aid allocations are increasingly linked with analyses of country performance. Aid is offered as an incentive to countries to demonstrate their development credentials and their commitment to international standards of governance and human rights. Problematic for the aid community is what to do about countries that are not performing well and seem to show little commitment to doing so. There is growing interest within the aid community about how to engage in these ‘poorly performing’ countries. This report, commissioned by the UK Department for International Development, reviews critically current debates regarding aid in ‘poorly performing’ countries. The study sought to clarify and make operational the concept of ‘poor performance’ by analysing the criteria against which performance is assessed, identifying the key constraints to aid engagement and developing an approach at the country level for better understanding poor performance. It has combined extensive review of relevant literatures and a statistical component with a series of desk-based country studies (India, Malawi, Rwanda and Sudan).