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What does motivate lending and aid to the HIPCs?

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Author Info

  • Silvia Marchesi

    (University of Siena; University of Milano)

  • Alessandro Missale

    (University of Siena; University of Milano)

Abstract

We examine both grants and net loans made to low income countries during the last two decades to understand the main reasons that motivated the behaviour of both donors and creditors. We find that the total amount of net transfers to HIPCs, as compared to non-HIPCs, have been increasing with their debt level. Greater net transfers have taken the form of net loans from multilateral organisations and grants in exchange for loans from bilateral institutions. This evidence thus suggests that HIPCs have kept receiving large amounts of resources just because of their high indebtedness, thereby supporting both the hypothesis of defensive lending and defensive granting.

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Bibliographic Info

Paper provided by Centro Studi Luca d\'Agliano, University of Milano in its series Development Working Papers with number 189.

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Date of creation: 01 Aug 2004
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Handle: RePEc:csl:devewp:189

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Keywords: debt relief; foreign aid; highly indebted poor countries;

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References

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  1. Collier, Paul & Hoeffler, Anke, 2002. "Aid, policy, and growth in post-conflict societies," Policy Research Working Paper Series 2902, The World Bank.
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  6. Cohen, Daniel, 2001. "The HIPC Initiative: True and False Promises," International Finance, Wiley Blackwell, vol. 4(3), pages 363-80, Winter.
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  8. Renard, Robrecht & Cassimon, Danny, 2001. "On the Pitfalls of Measuring Aid," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  9. Nancy Birdsall & Stijn Claessens & Ishac Diwan, 2003. "Policy Selectivity Forgone: Debt and Donor Behavior in Africa," World Bank Economic Review, World Bank Group, vol. 17(3), pages 409-435, December.
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  11. William Easterly, 2002. "The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262550423.
  12. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-26, November.
  13. Neumayer, Eric, 2002. "Is Good Governance Rewarded? A Cross-national Analysis of Debt Forgiveness," World Development, Elsevier, vol. 30(6), pages 913-930, June.
  14. Easterly, William, 1999. "How did highly indebted poor countries become highly indebted? : reviewing two decades of debt relief," Policy Research Working Paper Series 2225, The World Bank.
  15. Collier, Paul & Dollar, David, 1999. "Aid allocation and poverty reduction," Policy Research Working Paper Series 2041, The World Bank.
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Citations

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Cited by:
  1. Tito Cordella & Luca Antonio Ricci & Marta Ruiz-Arranz, 2005. "Debt Overhang or Debt Irrelevance? Revisiting the Debt Growth Link," IMF Working Papers 05/223, International Monetary Fund.
  2. Silvia Marchesi & Laura Sabani, 2005. "IMF concern for reputation and conditional lending failure: theory and empirics," LSE Research Online Documents on Economics 24648, London School of Economics and Political Science, LSE Library.
  3. Marchesi, Silvia & Sabani, Laura, 2006. "Prolonged Use and Conditionality Failure: Investigating IMF Responsibility," Working Paper Series RP2006/11, World Institute for Development Economic Research (UNU-WIDER).
  4. Danny Cassimon & Stijn Claessens & Bjorn Van Campenhout, 2007. "Empirical Evidence on the New International Aid Architecture," IMF Working Papers 07/277, International Monetary Fund.
  5. Daniel Cohen & Pierre Jacquet & Helmut Reisen, 2007. "Loans or Grants?," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 143(4), pages 764-782, December.
  6. Simone Bertoli & Giovanni Andrea Cornia & Francesco Manaresi, 2007. "Aid performance and its determinants. A comparison of Italy with the OECD norm," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 60(242), pages 271-321.
  7. William Akoto, 2013. "Do countries strategically improve their institutions to access increased debt relief?," Economics Bulletin, AccessEcon, vol. 33(2), pages 1185-1192.
  8. Simone Bertoli & Giovanni Andrea Cornia & Francesco Manaresi, 2008. "Aid Effort and Its Determinants: A Comparison of the Italian Performance with other OECD Donors," Working Papers - Economics wp2008_11.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
  9. Freytag, Andreas & Pehnelt, Gernot, 2009. "Debt Relief and Governance Quality in Developing Countries," World Development, Elsevier, vol. 37(1), pages 62-80, January.
  10. Silvia Marchesi & Laura Sabani, 2005. "Prolonged Use and Conditionality Failure: Investigating the IMF Responsibility," Development Working Papers 202, Centro Studi Luca d\'Agliano, University of Milano.
  11. Powell, Robert & Bird, Graham, 2010. "Aid and Debt Relief in Africa: Have They Been Substitutes or Complements?," World Development, Elsevier, vol. 38(3), pages 219-227, March.
  12. HEPP, Ralf, 2010. "CONSEQUENCES OF DEBT RELIEF INITIATIVES IN THE 1990s," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 10(1).
  13. James Vreeland, 2011. "Foreign aid and global governance: Buying Bretton Woods – the Swiss-bloc case," The Review of International Organizations, Springer, vol. 6(3), pages 369-391, September.

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