Regional Public Goods in Official Development Assistance

Ferroni, Marco

doi:10.1007/978-1-4615-0979-0_6

Cited by 14 publications

(20 citation statements)

References 4 publications

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“…Our analysis has a couple of important policy implications. In recent years, regional institutions have been clamouring to assume a larger role in disbursing funds to support regional public goods in developing countries (Ferroni, 2002;Ferroni and Mody, 2002;and Sandler, 2004). If regional development banks and related institutions are to be given more funds -say, from the World Bank -to provide such IPGs, then they need to adjust their grant-loan mix to account for the extent of international benefit spillovers.…”

Section: Policy Implications and Concluding Remarksmentioning

confidence: 99%

“…In the context of this paper, recipient benefit share reflects the willingness on the part of the recipient nation to accept a particular combination of loans and grants from the institution or nation disbursing funds to finance an activity. If an aid-funded activity is more purely public yielding large cross-border benefit spillovers to nations other than the aid recipient, then this increases the possibility for free riding and thus suboptimal provision, so that a grant is the preferred financing instrument (Ferroni, 2002). If loans are extended to finance such public goods, then these need to be multi-country loans to internalise the spillovers (Kanbur, 2002).…”

Section: Introductionmentioning

confidence: 99%

“…This outcome inhibits the ability of regional institutions to promote recipient ownership and overall allocative efficiency. Ironically, the regional institutions are trying to assume a greater role in supporting public good provision in developing countries (Ferroni, 2002). A change in their aid-disbursement policy appears necessary if these regional institutions are to warrant this enhanced role.…”

Section: Introductionmentioning

confidence: 99%

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Donors' Mechanisms for Financing International and National Public Goods: Loans or Grants?

Mascarenhas

Sandler

2005

World Economy

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This paper investigates whether three classes of donors – multilateral organisations, regional institutions and bilateral donors – tailor their mix of grants and loans to reflect international benefit spillovers and recipient‐specific benefits, derived from aid‐funded activities in developing and transition countries. To account for recipient benefit shares, donors should use a greater share of grants when supported activities yield a larger portion of international public benefits. A greater reliance on loans is appropriate when a large portion of recipient‐specific benefits are associated with the assistance. By reflecting recipient benefit shares in the grant‐loan mix, donors’ assistance also promotes allocative efficiency. Using the Credit Reporting System (CRS) database from OECD for 1980–2000, our analysis establishes that various donor classes apply different grant‐loan mixtures when supporting the environment, health, knowledge and governance sectors of recipient countries. We employ analysis of variance and other statistical comparisons of the means to investigate differences among donor classes. We demonstrate that bilateral donors do the best job in tailoring their grant‐loan mix to accord with the extent of international public good benefits embodied in the aid‐supported activity. Multilateral organisations’ grant‐loan mix is intermediate of the three types of donors, with some evidence of them relying more on grants to finance activities that possess a larger share of international public good spillovers. Regional institutions, however, do not discriminate their grant‐loan mix by either sectors or the associated public good spillovers. This finding suggests that regional development banks need to adjust their grant‐loan mix to better account for international benefit spillovers if these institutions are to warrant the increased funds to underwrite regional public goods that they have been seeking. If, however, their mix is institutionally set, then the stakeholders must give these institutions greater flexibility to tailor their grants and loans to who benefits from the aid‐supported public goods. This is the first paper to empirically ascertain whether the grant‐loan mix is tied to the inherent publicness of the aid‐funded activities.

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Section: Policy Implications and Concluding Remarksmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Donors' Mechanisms for Financing International and National Public Goods: Loans or Grants?

Mascarenhas

Sandler

2005

World Economy

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“…High costs make sourcing funding for preparing projects challenging. Regional projects also take longer to prepare (G20, 2011a, p. 18) and regional loans are rare (Ferroni, 2001). Unnecessary complexity and lack of standardization of contracts across countries or regions may also increase costs (Collier & Mayer, 2014, p. 7).…”

Section: Regional Infrastructurementioning

confidence: 99%

Barriers to infrastructure service delivery in Sub-Saharan Africa and South Asia

Advisors¹

2014

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“…Indeed, as found by Ferroni (2001), a major challenge for financing regional public good capacity is the fact that regional loans themselves are uncommon. Donors and private financiers may be reluctant to lend to newly created regional bodies, whilst individual countries may be reluctant to take loans on their books if they feel the project's success depends on the actions of other countries.…”

Section: Limited Fiscal Efficiencymentioning

confidence: 99%

Supranational Infrastructure Regulation: Institutional Opportunities and Challenges

Estache

Wren‐Lewis

2012

SSRN Journal

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Regional Public Goods in Official Development Assistance

Cited by 14 publications

References 4 publications

Donors' Mechanisms for Financing International and National Public Goods: Loans or Grants?

Donors' Mechanisms for Financing International and National Public Goods: Loans or Grants?

Barriers to infrastructure service delivery in Sub-Saharan Africa and South Asia

Supranational Infrastructure Regulation: Institutional Opportunities and Challenges

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