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

This paper adopts a new approach to the issue of foreign aid fungibility. In contrast to most existing empirical studies, panel data are employed that contain information on the specific purposes for which aid is given. This allows linking aid that...

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Main Author:	Van de Sijpe, Nicolas
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2013
Subjects:	ACCOUNTING ADMINISTRATIVE COSTS AID ALLOCATION ARTICLE BIRTH RATE BOND BUDGET CONSTRAINT BUDGET DOCUMENTS BUDGET PROCESS BUREAUCRATIC QUALITY BUYBACKS CAPACITY BUILDING CD CONDITIONALITY COUNTRY ECONOMISTS COUNTRY RISK CREDITOR DATA ANALYSIS DATA AVAILABILITY DEBT DEBT CONVERSIONS DEBT FORGIVENESS DEBT RELIEF DEBT SERVICE DEVELOPING COUNTRIES DISBURSEMENT DISBURSEMENTS DOMESTIC REVENUE ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC POLICY ECONOMIES OF SCALE EDUCATION EXPENDITURES EDUCATION SPENDING EQUIPMENT EXCLUSION EXPENDITURE EXPENDITURE CATEGORIES EXTERNAL DEBT EXTERNAL FINANCING FACE VALUE FEMALE FINANCES FISCAL AFFAIRS FISCAL BEHAVIOR FISCAL FEDERALISM FISCAL POLICY FUNGIBILITY FUNGIBILITY OF AID FUNGIBLE GENERAL BUDGET SUPPORT GLOBAL DEVELOPMENT FINANCE GLOBALIZATION GOVERNMENT BUDGETS GOVERNMENT CAPACITY GOVERNMENT EXPENDITURE GOVERNMENT EXPENDITURES GOVERNMENT FINANCE GOVERNMENT FINANCE STATISTICS GOVERNMENT SPENDING GROWTH RATE HEALTH EXPENDITURE HEALTH EXPENDITURES HEALTH SECTOR HEALTH SERVICES HEALTH SPENDING HOSPITALS HUMAN DEVELOPMENT INCLUSION INSTRUMENT INTERGOVERNMENTAL GRANTS INTERNATIONAL BANK INTERNATIONAL COMPARISONS INTERNATIONAL DEVELOPMENT INVESTMENT PROJECTS LEVEL OF DEBT LOCAL GOVERNMENT LONG-TERM EXTERNAL DEBT LOWER TAXES MARGINAL EFFECTS MEDICINES MILITARY EXPENDITURES MINISTRY OF FINANCE MONETARY FUND MORTALITY NET BORROWING NET PRESENT VALUE POLITICAL ECONOMY POLITICAL RISK POLLUTION POSITIVE COEFFICIENT PRESENT VALUE PROGRAMS PROVISION OF GOODS PUBLIC DEBT PUBLIC EDUCATION PUBLIC EXPENDITURE PUBLIC EXPENDITURES PUBLIC HEALTH PUBLIC INVESTMENTS PUBLIC POLICY PUBLIC SECTOR PUBLIC SPENDING RULE OF LAW SECTORAL ALLOCATION SECTORAL DISTRIBUTION SECTORAL EXPENDITURE SECTORAL GRANTS SOCIAL EXPENDITURE SOCIAL EXPENDITURES SOCIAL POLICY SOCIETIES SOCIETY STD STRUCTURAL ADJUSTMENT TAX TAX BASES TAX REVENUE TOTAL DEBT TOTAL EXPENDITURES TRANSPORTATION TREASURIES TYPES OF EXPENDITURES UNCERTAINTY UTILITY FUNCTION WORTH
Online Access:	http://documents.worldbank.org/curated/en/2013/01/17205596/foreign-aid-fungible-evidence-education-health-sectors http://hdl.handle.net/10986/13148

id	okr-10986-13148
recordtype	oai_dc
spelling	okr-10986-131482021-04-23T14:03:07Z Is Foreign Aid Fungible? Evidence from the Education and Health Sectors Van de Sijpe, Nicolas ACCOUNTING ADMINISTRATIVE COSTS AID ALLOCATION ARTICLE BIRTH RATE BOND BUDGET CONSTRAINT BUDGET DOCUMENTS BUDGET PROCESS BUREAUCRATIC QUALITY BUYBACKS CAPACITY BUILDING CD CONDITIONALITY COUNTRY ECONOMISTS COUNTRY RISK CREDITOR DATA ANALYSIS DATA AVAILABILITY DEBT DEBT CONVERSIONS DEBT FORGIVENESS DEBT RELIEF DEBT SERVICE DEVELOPING COUNTRIES DISBURSEMENT DISBURSEMENTS DOMESTIC REVENUE ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC POLICY ECONOMIES OF SCALE EDUCATION EXPENDITURES EDUCATION SPENDING EQUIPMENT EXCLUSION EXPENDITURE EXPENDITURE CATEGORIES EXTERNAL DEBT EXTERNAL FINANCING FACE VALUE FEMALE FINANCES FISCAL AFFAIRS FISCAL BEHAVIOR FISCAL FEDERALISM FISCAL POLICY FUNGIBILITY FUNGIBILITY OF AID FUNGIBLE GENERAL BUDGET SUPPORT GLOBAL DEVELOPMENT FINANCE GLOBALIZATION GOVERNMENT BUDGETS GOVERNMENT CAPACITY GOVERNMENT EXPENDITURE GOVERNMENT EXPENDITURES GOVERNMENT FINANCE GOVERNMENT FINANCE STATISTICS GOVERNMENT SPENDING GROWTH RATE HEALTH EXPENDITURE HEALTH EXPENDITURES HEALTH SECTOR HEALTH SERVICES HEALTH SPENDING HOSPITALS HUMAN DEVELOPMENT INCLUSION INSTRUMENT INTERGOVERNMENTAL GRANTS INTERNATIONAL BANK INTERNATIONAL COMPARISONS INTERNATIONAL DEVELOPMENT INVESTMENT PROJECTS LEVEL OF DEBT LOCAL GOVERNMENT LONG-TERM EXTERNAL DEBT LOWER TAXES MARGINAL EFFECTS MEDICINES MILITARY EXPENDITURES MINISTRY OF FINANCE MONETARY FUND MORTALITY NET BORROWING NET PRESENT VALUE POLITICAL ECONOMY POLITICAL RISK POLLUTION POSITIVE COEFFICIENT PRESENT VALUE PROGRAMS PROVISION OF GOODS PUBLIC DEBT PUBLIC EDUCATION PUBLIC EXPENDITURE PUBLIC EXPENDITURES PUBLIC HEALTH PUBLIC INVESTMENTS PUBLIC POLICY PUBLIC SECTOR PUBLIC SPENDING RULE OF LAW SECTORAL ALLOCATION SECTORAL DISTRIBUTION SECTORAL EXPENDITURE SECTORAL GRANTS SOCIAL EXPENDITURE SOCIAL EXPENDITURES SOCIAL POLICY SOCIETIES SOCIETY STD STRUCTURAL ADJUSTMENT TAX TAX BASES TAX REVENUE TOTAL DEBT TOTAL EXPENDITURES TRANSPORTATION TREASURIES TYPES OF EXPENDITURES UNCERTAINTY UTILITY FUNCTION WORTH This paper adopts a new approach to the issue of foreign aid fungibility. In contrast to most existing empirical studies, panel data are employed that contain information on the specific purposes for which aid is given. This allows linking aid that is provided for education and health purposes to recipient public spending in these sectors. In addition, aid flows that are recorded on a recipient's budget are distinguished from those that are not recorded on budget, and the previous failure to differentiate between on- and off-budget aid is shown to produce 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. The appropriate treatment of off-budget aid leads to lower fungibility estimates than those reported in many previous studies. Specifically, 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. 2013-04-11T16:26:59Z 2013-04-11T16:26:59Z 2013-01 http://documents.worldbank.org/curated/en/2013/01/17205596/foreign-aid-fungible-evidence-education-health-sectors http://hdl.handle.net/10986/13148 English en_US Policy Research Working Paper;No. 6346 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	ACCOUNTING ADMINISTRATIVE COSTS AID ALLOCATION ARTICLE BIRTH RATE BOND BUDGET CONSTRAINT BUDGET DOCUMENTS BUDGET PROCESS BUREAUCRATIC QUALITY BUYBACKS CAPACITY BUILDING CD CONDITIONALITY COUNTRY ECONOMISTS COUNTRY RISK CREDITOR DATA ANALYSIS DATA AVAILABILITY DEBT DEBT CONVERSIONS DEBT FORGIVENESS DEBT RELIEF DEBT SERVICE DEVELOPING COUNTRIES DISBURSEMENT DISBURSEMENTS DOMESTIC REVENUE ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC POLICY ECONOMIES OF SCALE EDUCATION EXPENDITURES EDUCATION SPENDING EQUIPMENT EXCLUSION EXPENDITURE EXPENDITURE CATEGORIES EXTERNAL DEBT EXTERNAL FINANCING FACE VALUE FEMALE FINANCES FISCAL AFFAIRS FISCAL BEHAVIOR FISCAL FEDERALISM FISCAL POLICY FUNGIBILITY FUNGIBILITY OF AID FUNGIBLE GENERAL BUDGET SUPPORT GLOBAL DEVELOPMENT FINANCE GLOBALIZATION GOVERNMENT BUDGETS GOVERNMENT CAPACITY GOVERNMENT EXPENDITURE GOVERNMENT EXPENDITURES GOVERNMENT FINANCE GOVERNMENT FINANCE STATISTICS GOVERNMENT SPENDING GROWTH RATE HEALTH EXPENDITURE HEALTH EXPENDITURES HEALTH SECTOR HEALTH SERVICES HEALTH SPENDING HOSPITALS HUMAN DEVELOPMENT INCLUSION INSTRUMENT INTERGOVERNMENTAL GRANTS INTERNATIONAL BANK INTERNATIONAL COMPARISONS INTERNATIONAL DEVELOPMENT INVESTMENT PROJECTS LEVEL OF DEBT LOCAL GOVERNMENT LONG-TERM EXTERNAL DEBT LOWER TAXES MARGINAL EFFECTS MEDICINES MILITARY EXPENDITURES MINISTRY OF FINANCE MONETARY FUND MORTALITY NET BORROWING NET PRESENT VALUE POLITICAL ECONOMY POLITICAL RISK POLLUTION POSITIVE COEFFICIENT PRESENT VALUE PROGRAMS PROVISION OF GOODS PUBLIC DEBT PUBLIC EDUCATION PUBLIC EXPENDITURE PUBLIC EXPENDITURES PUBLIC HEALTH PUBLIC INVESTMENTS PUBLIC POLICY PUBLIC SECTOR PUBLIC SPENDING RULE OF LAW SECTORAL ALLOCATION SECTORAL DISTRIBUTION SECTORAL EXPENDITURE SECTORAL GRANTS SOCIAL EXPENDITURE SOCIAL EXPENDITURES SOCIAL POLICY SOCIETIES SOCIETY STD STRUCTURAL ADJUSTMENT TAX TAX BASES TAX REVENUE TOTAL DEBT TOTAL EXPENDITURES TRANSPORTATION TREASURIES TYPES OF EXPENDITURES UNCERTAINTY UTILITY FUNCTION WORTH
spellingShingle	ACCOUNTING ADMINISTRATIVE COSTS AID ALLOCATION ARTICLE BIRTH RATE BOND BUDGET CONSTRAINT BUDGET DOCUMENTS BUDGET PROCESS BUREAUCRATIC QUALITY BUYBACKS CAPACITY BUILDING CD CONDITIONALITY COUNTRY ECONOMISTS COUNTRY RISK CREDITOR DATA ANALYSIS DATA AVAILABILITY DEBT DEBT CONVERSIONS DEBT FORGIVENESS DEBT RELIEF DEBT SERVICE DEVELOPING COUNTRIES DISBURSEMENT DISBURSEMENTS DOMESTIC REVENUE ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC POLICY ECONOMIES OF SCALE EDUCATION EXPENDITURES EDUCATION SPENDING EQUIPMENT EXCLUSION EXPENDITURE EXPENDITURE CATEGORIES EXTERNAL DEBT EXTERNAL FINANCING FACE VALUE FEMALE FINANCES FISCAL AFFAIRS FISCAL BEHAVIOR FISCAL FEDERALISM FISCAL POLICY FUNGIBILITY FUNGIBILITY OF AID FUNGIBLE GENERAL BUDGET SUPPORT GLOBAL DEVELOPMENT FINANCE GLOBALIZATION GOVERNMENT BUDGETS GOVERNMENT CAPACITY GOVERNMENT EXPENDITURE GOVERNMENT EXPENDITURES GOVERNMENT FINANCE GOVERNMENT FINANCE STATISTICS GOVERNMENT SPENDING GROWTH RATE HEALTH EXPENDITURE HEALTH EXPENDITURES HEALTH SECTOR HEALTH SERVICES HEALTH SPENDING HOSPITALS HUMAN DEVELOPMENT INCLUSION INSTRUMENT INTERGOVERNMENTAL GRANTS INTERNATIONAL BANK INTERNATIONAL COMPARISONS INTERNATIONAL DEVELOPMENT INVESTMENT PROJECTS LEVEL OF DEBT LOCAL GOVERNMENT LONG-TERM EXTERNAL DEBT LOWER TAXES MARGINAL EFFECTS MEDICINES MILITARY EXPENDITURES MINISTRY OF FINANCE MONETARY FUND MORTALITY NET BORROWING NET PRESENT VALUE POLITICAL ECONOMY POLITICAL RISK POLLUTION POSITIVE COEFFICIENT PRESENT VALUE PROGRAMS PROVISION OF GOODS PUBLIC DEBT PUBLIC EDUCATION PUBLIC EXPENDITURE PUBLIC EXPENDITURES PUBLIC HEALTH PUBLIC INVESTMENTS PUBLIC POLICY PUBLIC SECTOR PUBLIC SPENDING RULE OF LAW SECTORAL ALLOCATION SECTORAL DISTRIBUTION SECTORAL EXPENDITURE SECTORAL GRANTS SOCIAL EXPENDITURE SOCIAL EXPENDITURES SOCIAL POLICY SOCIETIES SOCIETY STD STRUCTURAL ADJUSTMENT TAX TAX BASES TAX REVENUE TOTAL DEBT TOTAL EXPENDITURES TRANSPORTATION TREASURIES TYPES OF EXPENDITURES UNCERTAINTY UTILITY FUNCTION WORTH Van de Sijpe, Nicolas Is Foreign Aid Fungible? Evidence from the Education and Health Sectors
relation	Policy Research Working Paper;No. 6346
description	This paper adopts a new approach to the issue of foreign aid fungibility. In contrast to most existing empirical studies, panel data are employed that contain information on the specific purposes for which aid is given. This allows linking aid that is provided for education and health purposes to recipient public spending in these sectors. In addition, aid flows that are recorded on a recipient's budget are distinguished from those that are not recorded on budget, and the previous failure to differentiate between on- and off-budget aid is shown to produce 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. The appropriate treatment of off-budget aid leads to lower fungibility estimates than those reported in many previous studies. Specifically, 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	Publications & Research :: Policy Research Working Paper
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	World Bank, Washington, DC
publishDate	2013
url	http://documents.worldbank.org/curated/en/2013/01/17205596/foreign-aid-fungible-evidence-education-health-sectors http://hdl.handle.net/10986/13148
_version_	1764422797032947712

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

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