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Chapter 17 What Does Aid to Africa Finance?

In: Theory and Practice of Foreign Aid

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  • Shantayanan Devarajan
  • Andrew Sunil Rajkumar
  • Vinaya Swaroop

Abstract

The recent increase in aid to Africa, alongside increases in special-purpose aid, has revived interest in the question of the fungibility of aid – the notion that, if a donor gives aid for a project that the recipient government would have undertaken anyway, then the aid is financing some expenditure other than the intended project. That aid in this sense may be “fungible”, while long recognized, has recently been receiving some empirical support. This paper focuses on sub-Saharan Africa, the region with the largest GDP share of aid. It presents results indicating that aid may be partially fungible, and suggests some reasons why.

Suggested Citation

  • Shantayanan Devarajan & Andrew Sunil Rajkumar & Vinaya Swaroop, 2006. "Chapter 17 What Does Aid to Africa Finance?," Frontiers of Economics and Globalization, in: Theory and Practice of Foreign Aid, pages 333-355, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:fegzzz:s1574-8715(06)01017-7
    DOI: 10.1016/S1574-8715(06)01017-7
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