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Fungibility and the impact of development assistance: Evidence from Vietnam's health sector

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  • Wagstaff, Adam

Abstract

The apparent fungibility of aid is a challenge to the evaluation of donor-funded development projects, requiring a comparison of the observed outcomes with the outcomes that would have occurred if the project had not gone ahead. Where projects are targeted on specific geographic areas, counterfactual outcomes in each can differ from observed outcomes because the amount of government spending (gross of aid) differs, the productivity of government spending differs, or both. This paper estimates the benefits of two concurrent World Bank health projects in Vietnam targeted on specific provinces. Estimates are derived from a model linking outcomes (under-five mortality) to government spending before and after the project and in project and nonproject provinces, and are presented for different assumptions regarding fungibility of funds (zero and full fungibility) and the impacts of the project on the productivity of government spending (the project modifies productivity in both sectors equally and in neither sector). The estimated mortality reductions are highly insensitive to the assumed degree of fungibility, but highly sensitive to the assumed productivity effects (the estimates range from 1 to 25%). The wide range reflects the uncertainty due to the lack of a genuine control group of provinces.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Development Economics.

Volume (Year): 94 (2011)
Issue (Month): 1 (January)
Pages: 62-73

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Handle: RePEc:eee:deveco:v:94:y:2011:i:1:p:62-73

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Web page: http://www.elsevier.com/locate/devec

Related research

Keywords: Foreign aid Fungibility Impact evaluation Child mortality;

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Cited by:
  1. Furukawa, Mitsuaki & Takahata, Junichiro, 2013. "Is GBS Still a Preferable Aid Modality?," Working Papers 50, JICA Research Institute.
  2. Morrissey, Oliver, 2012. "Aid and Government Fiscal Behaviour: What Does the Evidence Say?," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  3. Acharya, Arnab & Alvarez, Melisa Mart.nez, 2012. "Aid Effectiveness in the Health Sector," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  4. Luc Christiaensen & Lei Pan, 2010. "Transfers and Development: Easy Come, Easy Go?," Working Paper Series wp2010-125, World Institute for Development Economic Research (UNU-WIDER).
  5. Ravallion, Martin & Wagstaff, Adam, 2010. "The World Bank's publication record," Policy Research Working Paper Series 5374, The World Bank.

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