Foreign Aid and the Question of Fungibility

Pack, Janet Rothenber; Pack, Howard

doi:10.2307/2109431

Cited by 277 publications

(121 citation statements)

References 13 publications

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“…As it can be seen from this What is more, contrary to the studies of Griffin (1970), Boone (1996), and more recently (World Bank 1998), which argue that much foreign aid is used to finance government consumption, the estimate of 2 ρ also indicates that debt servicing and not consumption is main destination of aid funds. This finding confirms earlier results by Pack and Pack (1993) who found that around 88 cents per dollar of aid is used for debt servicing in the context of The Dominican Republic. …”

Section: Results and Interpretationsupporting

confidence: 92%

Aid, Debt Burden and Government Fiscal Behaviour in Cote d'Ivoire

McGillivray

Ouattara

2003

SSRN Journal

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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. Terms of use: Documents in AbstractThis paper examines the impact of foreign aid on public sector fiscal behaviour in Côte d'Ivoire. A special interest is the relationship between aid, debt servicing and debt, given that Côte d'Ivoire is a highly indebted country. The theoretical model employed differs from those of previous studies by highlighting the interaction between debt servicing and the other fiscal variables. This model is estimated using 1975-99 time series data. Key findings are that the bulk of aid is allocated to debt servicing and that aid is associated with increases in the level of public debt. Outline

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Section: Results and Interpretationsupporting

confidence: 92%

Aid, Debt Burden and Government Fiscal Behaviour in Cote d'Ivoire

McGillivray

Ouattara

2003

SSRN Journal

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“…Pack and Pack (1993) and Khilji and Zampelli (1991) found that governments were able to, ex-post, fully redirect expenditures agreed to under aid programs to alternative uses. Pack and Pack (1990) found that aid flows were not fungible in Indonesia, and they concluded that this was due to the large amounts concerned.…”

Section: Figurementioning

confidence: 99%

Politics and the effectiveness of foreign aid

Boone¹

1996

European Economic Review

1,010

485

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Critics of foreign aid programs have long argued that poverty reflects government failure. In this paper I analyze the effectiveness of foreign aid programs to gain insights into political regimes in aid recipient countries. My analytical framework shows how three stylized political/economic regimes labeled egalitarian, elitist and laissez-faire would use foreign aid. I then test reduced form equations using data on nonmilitary aid flows to 96 countries. I find that models of elitist political regimes best predict the impact of foreign aid. Aid does not significantly increase investment and growth, nor benefit the poor as measured by improvements in human development indicators, but it does increase the size of government. I also find that the impact of aid does not vary according to whether recipient governments are liberal democratic or highly repressive. But liberal political regimes and democracies, ceteris paribus, have on average 30% lower infant mortality than the least free regimes. This may be due to greater empowerment of the poor under liberal regimes even though the political elite continues to receive the benefits of aid programs. An implication is that short term aid targeted to support new liberal regimes may be a more successful means of reducing poverty than current programs.

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“…Fungibility is the process by which the recipient government 'offsets donor spending for a particular purpose by reducing its own expenditures on the same purpose ... therefore aid substitutes rather than supplements local spending' (Foster and Leavy 2001). The existence of fungibility of development assistance has been documented extensively in the literature from as early as 1993 (Pack andPack 1993, World Bank 1998). Fungibility can occur at the macroeconomic (Gottret and Schieber 2006), sector (Farag et al 2009, Gottret and Schieber 2006, Lu et al 2010) and subsector (Shiffman 2008, Gottret andSchieber 2006) level.…”

Section: Fungibilitymentioning

confidence: 99%

Aid Effectiveness in the Health Sector

Acharya¹,

Martínez-Álvarez²

2012

Better Aid

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This paper explores the current evidence underlying the debate on aid effectiveness, with a specific focus on the health sector. It summarizes the history of aid and outlines the methodological challenges encountered when assessing its effectiveness. The current evidence on 'what works' in the different aid modalities is outlined, highlighting examples of success. The review finds that resource allocation, lack of predictability of funds, fragmentation, fungibility and the system of relationships foreign aid generates all hinder its effectiveness. Furthermore, even when projects are successful, countries face constraints in scaling them up. The aid effectiveness debate is dynamic, however, and constantly influenced by new global policies and players. The paper ends with a discussion of the future of aid and how these new actors and policies are likely to shape the landscape of development co-operation.

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Foreign Aid and the Question of Fungibility

Cited by 277 publications

References 13 publications

Aid, Debt Burden and Government Fiscal Behaviour in Cote d'Ivoire

Aid, Debt Burden and Government Fiscal Behaviour in Cote d'Ivoire

Politics and the effectiveness of foreign aid

Aid Effectiveness in the Health Sector

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