Absorptive Capacity: More Than the Volume of Aid, its Modalities Matter
AbstractWe examine whether absorptive capacity represents a valid reason to reject the proposal of a large aid increase in order to help poor countries to move out of the underdevelopment trap. We consider absorptive capacity, the set of limits to an effective use of aid inflows, under for main aspects: 1) disbursement constraints, which lead to under utilisation of credits; 2) macroeconomic troubles, including loss of competitiveness and macroeconomic volatility; 3) decrease of aid returns, actually slower in more vulnerable countries, 4) institutions weakening induced by aid dependency. We argue that these limits to absorptive capacity may be removed by an improvement of aid modalities, such as better balancing between productive and social activities financed by aid, using aid as insurance against exogenous shocks, giving priority in aid allocation to “least developed countries”, which are the most vulnerable, and finally substituting a performance-based conditionality to the traditional-policy based one.
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 200702.
Date of creation: 2007
Date of revision:
Conditionality; volatility; aid effectiveness; absorptive capacity;
Other versions of this item:
- Patrick Guillaumont & Sylviane Guillaumont Jeanneney, 2011. "Absorptive Capacity: More Than the Volume of Aid, its Modalities Matter," Working Papers, HAL halshs-00557130, HAL.
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.:
- Isham, Jonathan & Kaufmann,Daniel, 1995.
"The forgotten rationale for policy reform : the productivity of investment projects,"
Policy Research Working Paper Series, The World Bank
1549, The World Bank.
- Jonathan Isham & Daniel Kaufmann, 1999. "The Forgotten Rationale For Policy Reform: The Productivity Of Investment Projects," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 114(1), pages 149-184, February.
- 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,
Wiley Blackwell, vol. 29(11), pages 1519-1547, November.
- 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, The World Bank 3750, The World Bank.
- Gaoussou Diarra, 2011. "Aid unpredictability and absorptive capacity: analyzing disbursement delays in Africa," Economics Bulletin, AccessEcon, vol. 31(1), pages 1004-1017.
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.