Foreign aid ' s impact on public spending

About

Countries

Data & Research

Learning

News

Projects & Operations

Publications

Topics

Home > Data & Research > Document Search > Report Details

Foreign aid's impact on public spending, Volume 1

Author:	Feyzioglu, Tarhan; Swaroop, Vinaya; Min Zhu;	Collection Title:	Policy, Research working paper ; no. WPS 1610
Date Stored:	1996/05/01	Document Date:	1996/05/31
Document Type:	Policy Research Working Paper	Language:	English
Major Sector:	Public Administration, Law, and Justice	Report Number:	WPS1610
Sub Sectors:	Other Public Sector Management	SubTopics:	Economic Theory & Research; Economic Stabilization; National Governance; Inequality; Decentralization; Gender and Development; Development Economics & Aid Effectiveness; Public Sector Economics
Volume No:	1

Summary: Using a model of aid fungibility, the authors examine the relationship between foreign aid and public spending. Based on a panel of cross-country and time-series data, their results show that roughly 75 cents of every dollar given in net development assistance goes to current spending and 25 cents to capital spending in the recipient countries. But concessionary loans - a component of development assistance - stimulate far more government spending. Their results also show that aid increases both public and private investment. To test aid fungibility across both public spending categories, they use a newly constructed data series on the net disbursement of concessionary loans. They find that concessionary loans given to the transport and communication sector are fully nonfungible. But loans to the energy sector are converted into fungible monies and part of the funds leak into transport and communications. Loans to agriculture and education are also fungible. There is no evidence of concessionary funds being diverted for military purposes. Their results show that total public spending in the health sector has no impact on reducing infant mortality, but concessionary loans to the health sector do. This finding leads the authors to conclude that linking foreign aid to an agreed-upon public spending program in areas critical to development might be an effective way to transfer resources to developing countries.


Official Documents Official, scanned versions of documents (may include signatures, etc.)
File Type		Description	File Size (mb)

	PDF 48 pages	Official version*	3.36 (approx.)
	Text	Text version**


Light-Weight Documents Lighter (less MB) documents which may or may not be the final, official version
File Type		Description	File Size (mb)

	PDF 48 pages	WPS1610	1.65

* The official version is derived from scanning the final, paper copy of the document and is the official,
archived version including all signatures, charts, etc.

** The text version is the OCR text of the final scanned version and is not an accurate representation of the final text.
It is provided solely to benefit users with slow connectivity.

Permanent URL for this page: http://go.worldbank.org/9EA4TKIUZ0