Chapter 17 What Does Aid to Africa Finance?

Devarajan, Shantayanan; Rajkumar, Andrew Sunil; Swaroop, Vinaya

doi:10.1016/s1574-8715(06)01017-7

Cited by 13 publications

(27 citation statements)

References 14 publications

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“…This was based on the conjecture that fractionalization might be correlated with the salience of ethnic divisions as political issues (and thus the non-salience of overall primary education provision). However, the effect of democracy on education did not in practice depend on this 15 This conclusion that direct donor financing of education was limited is supported by evidence from Devarajan, Rajkumar, and Swaroop (1999 The regressions reported in Table 2 test Hypothesis 3 by considering determinants of total government spending on education. Regression (1) is a pooled OLS estimate which shows that multiparty political competition is positively and significantly correlated with total government spending on education.…”

Section: Panel Estimates Of the Determinants Of Education Spendingmentioning

confidence: 90%

“…It should be remembered that the regressions show a significant correlation between overall aid flows and education spending. A study by Devarajan, Rajkumar, and Swaroop (1999) found in a smaller sample of African countries that aid flows targeted directly at the education sector resulted in a nearly one for one increase in education expenditures. Though this is strictly conjecture, it may be possible to reconcile these apparently divergent findings.…”

Section: Panel Estimates Of the Determinants Of Education Spendingmentioning

confidence: 99%

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Democracy and Education Spending in Africa

Stasavage¹

2005

American Journal of Political Science

132

174

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, seminar participants at CSAE, Oxford and at the LSE, as well as three anonymous referees and the editors for comments and suggestions. I would also like to thank the Department for International Development (UK) for funding this research.While it is widely believed that electoral competition influences public spending decisions, there has been relatively little effort to examine how recent democratization in the developing world has resulted in changes in basic service provision. There have been even fewer attempts to investigate whether democracy matters for public spending in the poorest developing countries, where "weak institutions" may mean that the formal adoption of electoral competition has little effect on policy. In this paper I confront these questions directly, asking whether the shift to multiparty competition in African countries has resulted in increased spending on primary education.I develop an argument, illustrated with a game-theoretic model, which suggests that the need to obtain an electoral majority may have prompted African governments to spend more on education, and to prioritize primary schools over universities within the education budget. I test three propositions from the model using panel data on electoral competition and education spending in African countries. I find clear evidence that democratically elected African governments have spent more on primary education, while spending on universities appears unaffected by democratization. 1 1. IntroductionAt the time of the African democracy movements of the early 1990s opinions varied widely about the effect of democratization on economic performance and on economic policy. While some authors predicted that democracy would be associated with major economic changes, other observers were less optimistic, suggesting that the formal trappings of multiparty democracy would have only a limited impact. With several years of hindsight, we can begin to ask whether and how policies adopted by elected African governments have actually differed from those pursued by authoritarian regimes. African countries represent an important set of cases for scholars interested in investigating whether democratic transitions can have an impact on policy even in "weaklyinstitutionalized polities" where democratic rules may be imperfectly respected, and where policy choices may depend primarily upon patron-client relationships. In this paper I ask whether the move to multiparty electoral competition that took place in many African countries during the 1990s has prompted governments to spend more on primary education. This paper contributes to a small but growing literature that examines whether democracies behave differently from their authoritarian counterparts when it comes to the provision of public services. Work by Brown and Hunter (1999), Kaufman and Segura-Ubiergo (2001), and Ames (1987) has found that democracies in Latin America tend to spend more on items like education and health than do autocracies. Brown and Hunter (2004) have found that Latin Am...

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Section: Panel Estimates Of the Determinants Of Education Spendingmentioning

confidence: 90%

Section: Panel Estimates Of the Determinants Of Education Spendingmentioning

confidence: 99%

Democracy and Education Spending in Africa

Stasavage¹

2005

American Journal of Political Science

132

174

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“…For example, Devarajan et al. () report fungibility of aid at the sectoral level, while finding that at the aggregate level each dollar of aid leads to a 90 dollar cent increase in government expenditures in a sample of 18 sub‐Saharan African countries in the period 1971–1995. In a similar study, Feyzioglu et al.…”

Section: Literature Reviewmentioning

confidence: 99%

The Impact of Aid on Total Government Expenditures: New Evidence on Fungibility

Marc

2016

Review Development Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. This study has been prepared within the UNU-WIDER visiting scholar and PhD internship programmes. Terms of use: Documents in Copyright © UNU-WIDER 2015ISSN 1798-7237 ISBN 978-92-9230-895-7 Typescript prepared by the author.UNU-WIDER gratefully acknowledges the financial contributions to the research programme from the governments of Denmark, Finland, Sweden, and the United Kingdom.The World Institute for Development Economics Research (WIDER) was established by the United Nations University (UNU) as its first research and training centre and started work in Helsinki, Finland in 1985. The Institute undertakes applied research and policy analysis on structural changes affecting the developing and transitional economies, provides a forum for the advocacy of policies leading to robust, equitable and environmentally sustainable growth, and promotes capacity strengthening and training in the field of economic and social policy-making. Work is carried out by staff researchers and visiting scholars in Helsinki and through networks of collaborating scholars and institutions around the world.UNU-WIDER, Katajanokanlaituri 6 B, 00160 Helsinki, Finland, wider.unu.eduThe views expressed in this publication are those of the author(s). Publication does not imply endorsement by the Institute or the United Nations University, nor by the programme/project sponsors, of any of the views expressed.Abstract Aid is said to be fungible at the aggregate level if it raises government expenditures by less than the total amount. This happens when the recipient government decreases domestic revenue, decreases net borrowing, or when aid bypasses the budget. This study makes three contributions to both fungibility and fiscal response literature. First, fungibility at the aggregate level is re-examined on a bigger recent panel dataset, distinguishing between short-and longterm impact of aid. The results indicate that aid is partly fungible in the long run and highly fungible in the short run. Second, to account for aid bypassing the budget, technical cooperation is used as a proxy for off-budget aid. Off-budget aid is found to be non-fungible and on-budget aid is partly fungible. Third, fungibility of bilateral and multilateral aid is analysed: the results indicate lower fungibility of multilateral aid.

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“…Most of the early results in this literature reported that aid discourages tax collection across countries (Mahdavi 2008, Remmer 2004, Gupta, Clemens, Pivovarsky and Tiongson 2004, Devarajan, Rajkumar and Swaroop 1999, Bräutigam and Knack 2004, Knack 2009). The most influential of these results was that of Gupta et al (2004) from the IMF, which not only found that aid reduces tax effort across countries, but also argues that that the composition of aid matters.…”

Section: Appendix Existing Evidence Linking Aid and Tax Effortmentioning

confidence: 99%