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Aid Volatility and Donor–Recipient Characteristics in ‘Difficult Partnership Countries’

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  • DAVID FIELDING
  • GEORGE MAVROTAS

Abstract

One factor limiting aid effectiveness is its volatility. We examine aid volatility in 66 countries over 1975–2004, paying particular attention to the characteristics of ‘difficult partnership countries’ and making a distinction between sector aid and total aid. We explore whether weak recipient institutions and policies are associated with greater volatility, allowing for differences in donor characteristics. Institutional quality and macroeconomic stability affect the stability of all kinds of aid, as does reliance on a small number of donors. However, the relative importance of these effects varies across different aid types.

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  • David Fielding & George Mavrotas, 2008. "Aid Volatility and Donor–Recipient Characteristics in ‘Difficult Partnership Countries’," Economica, London School of Economics and Political Science, vol. 75(299), pages 481-494, August.
    • Handle: RePEc:bla:econom:v:75:y:2008:i:299:p:481-494
    DOI: 10.1111/j.1468-0335.2007.00621.x
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    2. Paul Mosley, 2012. "Fiscal Composition and Aid Effectiveness: A Political-Economy Model," WIDER Working Paper Series wp-2012-029, World Institute for Development Economic Research (UNU-WIDER).
    3. Furukawa, Mitsuaki & Mikami, Satoru, 2014. "Is Country-system-based Aid Really Better than Project-based Aid? Evidence from Rural Water Supply Management in Uganda," Working Papers 64, JICA Research Institute.
    4. Hudson, John, 2015. "Consequences of Aid Volatility for Macroeconomic Management and Aid Effectiveness," World Development, Elsevier, vol. 69(C), pages 62-74.
    5. S. Guillaumont Jeanneney & S. J‐A. Tapsoba, 2012. "Aid and Income Stabilization," Review of Development Economics, Wiley Blackwell, vol. 16(2), pages 216-229, May.
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    7. Simone Bertoli & Elisa Ticci, 2012. "A Fragile Guideline to Development Assistance," Development Policy Review, Overseas Development Institute, vol. 30(2), pages 211-230, March.
    8. Larru, Jose Maria, 2009. "A structural analysis of foreign aid to ten Mediterranean countries," MPRA Paper 17865, University Library of Munich, Germany.
    9. Gravier-Rymaszewska, Joanna, 2012. "How Aid Supply Responds to Economic Crises: A Panel VAR Approach," WIDER Working Paper Series 025, World Institute for Development Economic Research (UNU-WIDER).
    10. Furukawa, Mitsuaki, 2014. "Aid Fragmentation and Effectiveness for Infant and Child Mortality and Primary School Completion," Working Papers 83, JICA Research Institute.
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    12. Olofinbiyi, Tolulope & Mogues, Tewodaj, 2017. "Who Influences Government Spending in Agriculture? The Roles of Public Actors in Subnational Funding Allocation in Nigeria," Feed the Future Innovation Lab for Food Security Policy Research Papers 259572, Michigan State University, Department of Agricultural, Food, and Resource Economics, Feed the Future Innovation Lab for Food Security (FSP).
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    14. Pallas, Sarah Wood & Khuat, Thi Hai Oanh & Le, Quang Duong & Ruger, Jennifer Prah, 2015. "The changing donor landscape of health sector aid to Vietnam: A qualitative case study," Social Science & Medicine, Elsevier, vol. 132(C), pages 165-172.
    15. Bert D'Espallier & Marek Hudon & Ariane Szafarz, 2016. "Aid Volatility and Social Performance in Microfinance," Working Papers CEB 16-015, ULB -- Universite Libre de Bruxelles.
    16. Gunatilake, H. & Fabella, R.V & Lagman-Martin, A., 2011. "Foreign Aid, Aid Effectiveness and the New Aid Paradigm: A Review," Sri Lankan Journal of Agricultural Economics, Sri Lanka Agricultural Economics Association (SAEA), vol. 12, pages 1-44.
    17. Emmanuel Frot & Javier Santiso, 2008. "Development Aid and Portfolio Funds: Trends, Volatility and Fragmentation," OECD Development Centre Working Papers 275, OECD Publishing.
    18. S. Guillaumont Jeanneney & S. J‐A. Tapsoba, 2012. "Aid and Income Stabilization," Review of Development Economics, Wiley Blackwell, vol. 16(2), pages 216-229, May.
    19. Pallas, Sarah Wood & Ruger, Jennifer Prah, 2017. "Effects of donor proliferation in development aid for health on health program performance: A conceptual framework," Social Science & Medicine, Elsevier, vol. 175(C), pages 177-186.
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    22. Mosley, Paul, 2012. "Fiscal Composition and Aid Effectiveness: A Political-Economy Model," WIDER Working Paper Series 029, World Institute for Development Economic Research (UNU-WIDER).

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