The Volatility of Aid
AbstractIssues related to the volatility of aid flows are now becoming crucial in view of their relevance to the achievement of the Millennium Development Goals. The paper examines aid volatility using data for 66 aid recipients over the period 1973-2002. We improve upon earlier work in this important area by disaggregating total aid inflows into sector and programme aid. In this way they avoid focussing on a single aggregate, unlike most previous studies on aid volatility. They also adopt a different methodology to capture aid volatility. The institutional quality of the aid recipient affects the stability of sector aid but not that of programme assistance. Moreover, more open economies, which tend to be smaller and richer, ceteris paribus, are associated with more volatile sector aid flows. [Discussion Paper No. 2005/06]
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Bibliographic InfoPaper provided by World Institute for Development Economic Research (UNU-WIDER) in its series Working Paper Series with number DP2005/06.
Length: 22 pages
Date of creation: 2005
Date of revision:
aid volatility; aid heterogeneity; project aid; programme assistance; MDGs;
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