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Big Push versus Absorptive Capacity. How to reconcile the Two Approaches

Author

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  • Patrick Guillaumont

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique)

  • Sylviane Guillaumont Jeanneney

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique)

Abstract

In this paper we examine whether absorptive capacity can constitute sufficient justification for rejecting the proposal of a large aid increase to support the ‘big push'. We argue that the probability of a poverty trap exists for many countries, in particular the least developed countries (LDCs) and that an increase in aid is relevant for them. Moreover we show that the decrease in marginal aid returns is slower in vulnerable countries, which supports the rationale to include vulnerability as one of the aid-allocation criteria. We examine the main obstacles to absorptive capacity, such as disbursement constraints and short-term bottlenecks, macroeconomic problems, including loss in competitiveness and macroeconomic volatility, as well as the weakening of institutions. The general conclusion that we draw for reconciling the two approaches is that absorptive capacity strongly influenced by aid itself or by its modalities. The big push and absorptive capacity approaches cannot be reconciled without aid reform supported by an aid increase.

Suggested Citation

  • Patrick Guillaumont & Sylviane Guillaumont Jeanneney, 2007. "Big Push versus Absorptive Capacity. How to reconcile the Two Approaches," Post-Print hal-00204840, HAL.
    • Handle: RePEc:hal:journl:hal-00204840
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    Cited by:

    1. repec:dau:papers:123456789/13581 is not listed on IDEAS
    2. Patrick GUILLAUMONT, 2008. "Adapting Aid Allocation Criteria to Development Goals," Working Papers P01, FERDI.
    3. Patrick GUILLAUMONT, 2009. "Aid effectiveness for poverty reduction: macroeconomic overview and emerging issues," Working Papers P05, FERDI.
    4. Bandyopadhyay, Subhayu & Lahiri, Sajal & Younas, Javed, 2015. "Financing growth through foreign aid and private foreign loans: Nonlinearities and complementarities," Journal of International Money and Finance, Elsevier, vol. 56(C), pages 75-96.
    5. Sylviane GUILLAUMONT JEANNENEY, 2008. "Les fondements éthiques de l’aide publique au développement : une application à la France," Working Papers 200809, CERDI.
    6. Chauvet, Lisa & Ehrhart, Hélène, 2018. "Aid and growth: evidence from firm-level data," Journal of Development Economics, Elsevier, vol. 135(C), pages 461-477.
    7. Patrick GUILLAUMONT & Sylviane GUILLAUMONT JEANNENEY, 2009. "State fragility and economic vulnerability: What is measured and why?," Working Papers P07, FERDI.
    8. Harb, Nermeen & Hall, Stephen G., 2019. "Does foreign aid play a role in the maintenance of economic growth? A non-linear analysis," The Quarterly Review of Economics and Finance, Elsevier, vol. 73(C), pages 192-204.
    9. George Mavrotas, 2009. "Introduction: Development Aid-Theory, Policies, and Performance," Review of Development Economics, Wiley Blackwell, vol. 13(s1), pages 373-381, August.
    10. Patrick Guillaumont, 2011. "Adapting Aid Allocation Criteria to Development Goals," CERDI Working papers halshs-00556806, HAL.
    11. Sylviane Guillaumont Jeanneney, 2011. "Les fondements éthiques de l'aide publique au développement : une application à la France," CERDI Working papers halshs-00556808, HAL.

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