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Is foreign aid fungible ? evidence from the education and health sectors

Nicolas Van de Sijpe ()

No 6346, Policy Research Working Paper Series from The World Bank

Abstract: This paper adopts a new approach to the issue of foreign aid fungibility. In contrast to most existing empirical studies, panel data are employed that contain information on the specific purposes for which aid is given. This allows linking aid that is provided for education and health purposes to recipient public spending in these sectors. In addition, aid flows that are recorded on a recipient's budget are distinguished from those that are not recorded on budget, and the previous failure to differentiate between on- and off-budget aid is shown to produce biased estimates of fungibility. Sector program aid is the measure of on-budget aid, whereas technical cooperation serves as a proxy for off-budget aid. The appropriate treatment of off-budget aid leads to lower fungibility estimates than those reported in many previous studies. Specifically, in both sectors and across a range of specifications, technical cooperation, which is the largest component of total education and health aid, leads to, at most, a small displacement of recipient public expenditures.

Keywords: Health Monitoring&Evaluation; Gender and Health; Public Sector Expenditure Policy; Disability; Debt Markets (search for similar items in EconPapers)
Date: 2013-01-01
New Economics Papers: this item is included in nep-dev and nep-hea
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Related works:
Journal Article: Is Foreign Aid Fungible? Evidence from the Education and Health Sectors (2013) Downloads
Working Paper: Is foreign aid fungible? Evidence from the education and health sectors (2010) Downloads
Working Paper: Is foreign aid fungible? Evidence from the education and health sectors (2010) Downloads
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