Big Push versus Absorptive Capacity: How to Reconcile the Two Approaches
AbstractWe examine whether absorptive capacity represents a compulsory reason to reject the proposal of a large aid increase to support a big push. We argue that poverty trap is a probability for many countries, in particular the Least Developed Countries and that an aid increase is relevant for them. Moreover we show that the decrease in marginal aid returns is slower in vulnerable countries, what enhances the rationale to take vulnerability as one of the aid allocation criteria. We then examine the main limits to absorptive capacity, such as disbursement constraints and short term bottlenecks, macro economic troubles, including loss of competitiveness and macroeconomic volatility, as well as institution weakening. The general conclusion we draw to reconcile the two approaches is that absorptive capacity strongly depends on aid itself or on its very modalities. Big push and absorptive capacity approaches cannot be reconciled without an aid reform coming with an aid increase. First, needed is to balance the utilisation of aid between directly productive and social activities, in order to avoid transitory loss of competitiveness. Second, schemes helping to use aid as insurance against exogeneous shocks are to be enhanced because they lower the risk of Dutch disease and contribute to a faster and more equitable long term growth. Finally a performance-based conditionality should be substituted to the traditional policy-based one in order to cope with several absorptive capacity limitations, most importantly the socio-political one. An aid supported big push will not be effective without a new ownership of policy by the recipient countries.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by CERDI in its series Working Papers with number 200614.
Date of creation: 2006
Date of revision:
Other versions of this item:
- Patrick Guillaumont & Sylviane Guillaumont Jeanneney, 2010. "Big Push versus Absorptive Capacity: How to Reconcile the Two Approaches," Working Papers id:3000, eSocialSciences.
- Patrick Guillaumont & Sylviane Guillaumont Jeanneney, 2011. "Big Push versus Absorptive Capacity: How to Reconcile the Two Approaches," Working Papers halshs-00564565, HAL.
- Guillaumont, Patrick & Guillaumont Jeanneney, Sylviane, 2007. "Big Push versus Absorptive Capacity: How to Reconcile the Two Approaches," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
- C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dollar, David & Levin, Victoria, 2005. "Sowing and reaping: institutional quality and project outcomes in developing countries," Policy Research Working Paper Series 3524, The World Bank.
- Peter S. Heller, 2005. "Pity the Finance Minister: Issues in Managing a Substantial Scaling-Up of Aid Flows," IMF Working Papers 05/180, International Monetary Fund.
- Patrick GUILLAUMONT & Sylviane GUILLAUMONT JEANNENEY & Lisa CHAUVET & Pierre JACQUET & Bertrand SAVOYE, 2003. "Attenuating through Aid the Vulnerability to Price Shocks," Working Papers 200325, CERDI.
- Patrick Guillaumont & Sylviane Guillaumont Jeanneney & Jacky Amprou, 2011.
"Aid Selectivity According to Augmented Criteria,"
- Sylviane GUILLAUMONT JEANNENEY & Patrick GUILLAUMONT & Jacky AMPROU, 2006. "Aid Selectivity According to Augmented Criteria," Working Papers 200616, CERDI.
- Sylviane GUILLAUMONT JEANNENEY & Patrick GUILLAUMONT & Jacky AMPROU, 2005. "Aid Selectivity According to Augmented Criteria," Working Papers 200526, CERDI.
- Kaufmann, Daniel & Wang, Yan, 1995. "Macroeconomic policies and project performance in the social sectors: A model of human capital production and evidence from LDCs," World Development, Elsevier, vol. 23(5), pages 751-765, May.
- Hansen, Henrik & Tarp, Finn, 2001. "Aid and growth regressions," Journal of Development Economics, Elsevier, vol. 64(2), pages 547-570, April.
- George Mavrotas & David Fielding, 2010.
"The Volatility of Aid,"
- P. Guillaumont & L. Chauvet, 2001.
"Aid and Performance: A Reassessment,"
Journal of Development Studies,
Taylor & Francis Journals, vol. 37(6), pages 66-92.
- Lisa CHAUVET & Patrick GUILLAUMONT, 2003. "Aid and Growth Revisited: Policy, Economic Vulnerability and Political Instability," Working Papers 200327, CERDI.
- Collier, Paul & Dollar, David, 2000.
"Can the world cut poverty in half ? how policy reform and effective aid can meet international development goals,"
Policy Research Working Paper Series
2403, The World Bank.
- Collier, Paul & Dollar, David, 2001. "Can the World Cut Poverty in Half? How Policy Reform and Effective Aid Can Meet International Development Goals," World Development, Elsevier, vol. 29(11), pages 1787-1802, November.
- Kraay, Aart & Raddatz, Claudio, 2007.
"Poverty traps, aid, and growth,"
Journal of Development Economics,
Elsevier, vol. 82(2), pages 315-347, March.
- Jonathan Isham & Daniel Kaufmann, 1999.
"The Forgotten Rationale For Policy Reform: The Productivity Of Investment Projects,"
The Quarterly Journal of Economics,
MIT Press, vol. 114(1), pages 149-184, February.
- Isham, Jonathan & Kaufmann,Daniel, 1995. "The forgotten rationale for policy reform : the productivity of investment projects," Policy Research Working Paper Series 1549, The World Bank.
- Agenor, Pierre-Richard & Bayraktar, Nihal & Pinto Moreira, Emmanuel & El Aynaoui, Karim, 2005.
"Achieving the Millennium Development Goals in Sub-Saharan Africa : a macroeconomic monitoring framework,"
Policy Research Working Paper Series
3750, The World Bank.
- Pierre-Richard Agénor & Nihal Bayraktar & Emmanuel Pinto Moreira & Karim El Aynaoui, 2006. "Achieving the Millennium Development Goals in Sub-Saharan Africa: A Macroeconomic Monitoring Framework," The World Economy, Wiley Blackwell, vol. 29(11), pages 1519-1547, November.
- R. Lensink & H. White, 2001.
"Are There Negative Returns to Aid?,"
Journal of Development Studies,
Taylor & Francis Journals, vol. 37(6), pages 42-65.
- Lisa Chauvet & Patrick Guillaumont, 2011.
"Aid, Volatility and Growth,with special reference to Africa,"
- Lisa CHAUVET & Patrick GUILLAUMONT, 2006. "Aid, Volatility and Growth,with special reference to Africa," Working Papers 200640, CERDI.
- Isham, Jonathan & Kaufmann, Daniel & Pritchett, Lant H, 1997. "Civil Liberties, Democracy, and the Performance of Government Projects," World Bank Economic Review, World Bank Group, vol. 11(2), pages 219-42, May.
- Christopher S. Adam & David L. Bevan, 2006.
"Aid and the Supply Side: Public Investment, Export Performance, and Dutch Disease in Low-Income Countries,"
World Bank Economic Review,
World Bank Group, vol. 20(2), pages 261-290.
- Christopher Adam & David Bevan, 2004. "Aid and the Supply Side: Public Investment, Export Performance and Dutch Disease in Low Income Countries," Economics Series Working Papers 201, University of Oxford, Department of Economics.
- George Mavrotas, 2005. "Aid heterogeneity: looking at aid effectiveness from a different angle," Journal of International Development, John Wiley & Sons, Ltd., vol. 17(8), pages 1019-1036.
- Robert Lensink & Oliver Morrissey, 2000. "Aid instability as a measure of uncertainty and the positive impact of aid on growth," Journal of Development Studies, Taylor & Francis Journals, vol. 36(3), pages 31-49.
- Michel A. Robe & Stephane Pallage, 2000.
"Foreign Aid And The Business Cycle,"
Computing in Economics and Finance 2000
107, Society for Computational Economics.
- Griffin, Keith, 1970. "Foreign Capital, Domestic Savings and Economic Development," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 32(2), pages 99-112, May.
- Kasekende, L A & Atingi-Ego, M, 1999. "Uganda's Experience with Aid," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 8(4), pages 617-49, December.
- Cohen, Daniel, 1994. "Introduction," European Economic Review, Elsevier, vol. 38(3-4), pages 417-417, April.
- Papanek, Gustav F, 1973. "Aid, Foreign Private Investment, Savings, and Growth in Less Developed Countries," Journal of Political Economy, University of Chicago Press, vol. 81(1), pages 120-30, Jan.-Feb..
- Todd Moss & Gunilla Pettersson & Nicolas van de Walle, 2006. "An Aid-Institutions Paradox? A Review Essay on Aid Dependency and State Building in Sub-Saharan Africa," Working Papers 74, Center for Global Development.
- Sylviane GUILLAUMONT JEANNENEY & Patrick GUILLAUMONT & Gérard CHAMBAS & Christopher ADAM & Jan Willem GUNNING, 2003.
"Performance-Based Conditionality: A European Perspective,"
- Adam, Christopher & Chambas, Gerard & Guillaumont, Patrick & Guillaumont Jeanneney, Sylviane & Gunning, Jan Willem, 2004. "Performance-Based Conditionality: A European Perspective," World Development, Elsevier, vol. 32(6), pages 1059-1070, June.
- Henrik Hansen & Finn Tarp, 2000. "Aid effectiveness disputed," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(3), pages 375-398.
- Papanek, Gustav F, 1973. "The Effect of Aid and Other Resource Transfers on Savings and Growth in Less-Developed Countries: A Reply," Economic Journal, Royal Economic Society, vol. 83(331), pages 870-74, September.
- Elliot Berg, 2003. "Augmenter l'efficacité de l'aide : une critique de quelques points de vue actuels," Revue d’économie du développement, De Boeck Université, vol. 17(4), pages 11-42.
- Ale Bulir & A. Javier Hamann, 2003. "Aid Volatility: An Empirical Assessment," IMF Staff Papers, Palgrave Macmillan, vol. 50(1), pages 4.
- George Mavrotas & Bazoumana Ouattara, 2007. "Aid Modalities and Budgetary Response: Panel Data Evidence," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 143(4), pages 720-741, December.
- Sylviane GUILLAUMONT JEANNENEY, 2008.
"Les fondements éthiques de l’aide publique au développement : une application à la France,"
- Sylviane Guillaumont Jeanneney, 2011. "Les fondements éthiques de l'aide publique au développement : une application à la France," Working Papers halshs-00556808, HAL.
- Patrick Guillaumont, 2011. "Aid effectiveness for poverty reduction:macroeconomic overview and emerging issues," Working Papers halshs-00554285, HAL.
- Guillaumont, Patrick & Wagner, Laurent, 2012. "Aid and Growth Accelerations: Vulnerability Matters," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Vincent Mazenod).
If references are entirely missing, you can add them using this form.