Is Foreign Aid Fungible? Evidence from the Education and Health Sectors

This paper adopts a new approach to the issue of foreign aid fungibility. Unlike most existing empirical studies, I employ panel data that contain information on the specific purposes for which aid is given. This approach enables me to link aid that is provided for education and health purposes to r...

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Bibliographic Details
Main Author:	Van de Sijpe, Nicolas
Format:	Journal Article
Language:	en_US
Published:	Oxford University Press on behalf of the World Bank 2014
Subjects:	aid effectiveness birth rate economic growth expenditure female fungibility health expenditures health services mortality pollution public expenditures public health social policy
Online Access:	http://hdl.handle.net/10986/21012

id	okr-10986-21012
recordtype	oai_dc
spelling	okr-10986-210122021-04-23T14:04:01Z Is Foreign Aid Fungible? Evidence from the Education and Health Sectors Van de Sijpe, Nicolas aid effectiveness birth rate economic growth expenditure female fungibility health expenditures health services mortality pollution public expenditures public health social policy This paper adopts a new approach to the issue of foreign aid fungibility. Unlike most existing empirical studies, I employ panel data that contain information on the specific purposes for which aid is given. This approach enables me to link aid that is provided for education and health purposes to recipient public spending in these sectors. In addition, I distinguish between aid flows that are recorded on a recipient's budget and those that are not recorded, and I illustrate how the previous failure to differentiate between on- and off-budget aid produces 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. I show that the appropriate treatment of off-budget aid leads to lower fungibility estimates than those reported in many previous studies. Specifically, I find that 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. 2014-12-30T18:28:58Z 2014-12-30T18:28:58Z 2013-06 Journal Article World Bank Economic Review 1564-698X http://hdl.handle.net/10986/21012 en_US CC BY-NC-ND 3.0 IGO http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Oxford University Press on behalf of the World Bank Publications & Research :: Journal Article Africa Sub-Saharan Africa
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	en_US
topic	aid effectiveness birth rate economic growth expenditure female fungibility health expenditures health services mortality pollution public expenditures public health social policy
spellingShingle	aid effectiveness birth rate economic growth expenditure female fungibility health expenditures health services mortality pollution public expenditures public health social policy Van de Sijpe, Nicolas Is Foreign Aid Fungible? Evidence from the Education and Health Sectors
geographic_facet	Africa Sub-Saharan Africa
description	This paper adopts a new approach to the issue of foreign aid fungibility. Unlike most existing empirical studies, I employ panel data that contain information on the specific purposes for which aid is given. This approach enables me to link aid that is provided for education and health purposes to recipient public spending in these sectors. In addition, I distinguish between aid flows that are recorded on a recipient's budget and those that are not recorded, and I illustrate how the previous failure to differentiate between on- and off-budget aid produces 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. I show that the appropriate treatment of off-budget aid leads to lower fungibility estimates than those reported in many previous studies. Specifically, I find that 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.
format	Journal Article
author	Van de Sijpe, Nicolas
author_facet	Van de Sijpe, Nicolas
author_sort	Van de Sijpe, Nicolas
title	Is Foreign Aid Fungible? Evidence from the Education and Health Sectors
title_short	Is Foreign Aid Fungible? Evidence from the Education and Health Sectors
title_full	Is Foreign Aid Fungible? Evidence from the Education and Health Sectors
title_fullStr	Is Foreign Aid Fungible? Evidence from the Education and Health Sectors
title_full_unstemmed	Is Foreign Aid Fungible? Evidence from the Education and Health Sectors
title_sort	is foreign aid fungible? evidence from the education and health sectors
publisher	Oxford University Press on behalf of the World Bank
publishDate	2014
url	http://hdl.handle.net/10986/21012
_version_	1764447717573001216

Is Foreign Aid Fungible? Evidence from the Education and Health Sectors

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