Working Papers in Economics, Department of Economics, University of Bergen
Does better governance and commitment to development attract general budget support?
Abstract: General budget support (GBS) is funding which is not
earmarked for a specific sector or project, but is provided as direct
financial support to the public sector in the recipient country. This type
of aid is argued to have a positive effect on aid efficiency if it is
targeted at countries with good governance and a strong commitment to
development. In this study, data on commitments of official development
assistance (ODA) from 23 DAC donors to 115 recipient countries in the
period from 1995 to 2009 is used to estimate the probability of receiving
GBS. The results show that the DAC donors are selective with respect to the
quality of governance, and there is some support for the notion that the
recipient governments’ commitment to development is a significant
determinant for the allocation of GBS. Empirical evidence showing that DAC
donors are more selective when allocating GBS than with program aid in
total is also presented, underlining the importance of using disaggregated
data when analyzing aid allocation.
Keywords: aid allocation; general budget support; good governance; commitment to development; (follow links to similar papers)
JEL-Codes: F35; (follow links to similar papers)
50 pages, April 10, 2014
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