IDEAS home Printed from https://ideas.repec.org/a/bla/rdevec/v23y2019i1p231-255.html
   My bibliography  Save this article

General budget support as an aid instrument—impact on economic growth

Author

Listed:
  • Kaisa Alavuotunki
  • Susanna Sandström

Abstract

Since the change of the new millennium, general budget support (GBS) has become a prominent, yet controversial and heavily debated, modality for delivering aid. We study GBS as an aid instrument from a cross‐country perspective. We examine if any growth impacts can be identified as a result of the use of GBS. We use data covering nine 4‐year intervals from 1976 to 2011. We modify two supply‐side IV strategies from previous aid–growth literature. In our main approach, we employ an interaction of an exogenous supply‐side variable (donor government fractionalization) and an endogenous variable (probability of receiving GBS) as an instrument for GBS, and in the alternative approach we construct an instrument following a supply‐side approach. Our results suggest that GBS receiving countries have grown faster than countries receiving other types of aid. Selection bias does not explain this result. The growth effect is not only attributed to lagged GBS but also to contemporaneous GBS flows.

Suggested Citation

  • Kaisa Alavuotunki & Susanna Sandström, 2019. "General budget support as an aid instrument—impact on economic growth," Review of Development Economics, Wiley Blackwell, vol. 23(1), pages 231-255, February.
    • Handle: RePEc:bla:rdevec:v:23:y:2019:i:1:p:231-255
    DOI: 10.1111/rode.12535
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/rode.12535
    Download Restriction: no
    File URL: https://libkey.io/10.1111/rode.12535?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:rdevec:v:23:y:2019:i:1:p:231-255. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=1363-6669 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.