With a Green Paper process on EU development cooperation and the debate on the Financial Perspectives both underway, this is an important time to review aid to middle-income countries (MICs). This paper seeks to provide evidence and ideas to help aid allocation decisions for the EC institutions and EU member states. It is ordered as follows:

1. it introduces the topic in the context of evolving EU development policy
2. reviews definitions and membership of income-related country groupings 
3. describes the evolution of aid flows to country groups 
4. assembles the arguments for and against aid to middle-income countries
5. concludes with two broad recommendations on how to conceptualise aid to MICs for its effective use in achieving development results.

The main conclusion of the present analysis of current evidence, thinking and practice is that international support to MICs, including financial aid, continues to play an important role in global development. Aid plays two roles in MICs: as a non-essential catalyst for change and, in some cases, as part of an orderly graduation process from aid dependence.