SITE Working Paper Series
No 6:
Crushed Aid: Fragmentation in Sectoral Aid
Emmanuel Frot ()
and Javier Santiso ()
Abstract: This paper measures and compares fragmentation in aid
sectors. Past studies focused on aggregate country data but a sector
analysis provides a better picture of fragmentation. We start by counting
the number of aid projects in the developing world and find that, in 2007,
more than 90 000 projects were running simultaneously. Project
proliferation is on a steep upward trend and will certainly be reinforced
by the emergence of new donors. Developing countries with the largest
numbers of aid projects have more than 2 000 in a single year. In parallel
to this boom of aid projects, there has been a major shift towards social
sectors and, as a consequence, these are the most fragmented. We quantify
fragmentation in each aid sector for donors and recipients and identify
which exhibit the highest fragmentation. While fragmentation is usually
seen as an issue when it is excessive, we also show that some countries
suffer from too little fragmentation. An original contribution of this
paper is to develop a monopoly index that identifies countries where a
donor enjoys monopoly power. Finally, we characterise countries with high
fragmentation levels. Countries that are poor, democratic and have a large
population get more fragmented aid. However, this is only because poor and
democratic countries attract more donors. Once we control for the number of
donors in a country-sector, democratic countries do not appear different
from non-democratic ones in any sector and poor countries actually have a
slightly less fragmented aid allocation.
Keywords: Aid; Fragmentation; (follow links to similar papers)
JEL-Codes: F35; (follow links to similar papers)
40 pages, December 2, 2009
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