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Aid-tying and the Real Value of Foreign Assistance: The Case of the Sudan

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  • Ibrahim Hassan Yassin

    (University of Gezira, Sudan.)

Abstract

This paper assesses the excess cost which results from aid-tying in some development projects in the Sudan. Tying can be of two types, either by source or by end-use. In the former case, restrictions are placed on where the recipients can spend the assistance. In the latter case, assistance is limited to specific items or projects. Thus, aid can be deemed to be doubly tied. In addition, there are other unquantifiable costs of tying. For example, the project to which the assistance will be tied might not suit the recipient's development programme, or the technology used may be inappropriate. Eight foreign-aided projects, which were tied by source as well as by end-use, were analysed to estimate the excess cost which results from the tying of aid. The overall weighted average of tying these projects appears to be 74 percent higher than the international market. In addition, the analysis shows that the terms of borrowing for these projects were hard; consequently, the grant element was low. Thus, if one takes into account the estimated excess cost of the tied foreign credits, which was greater than the commercial cost of borrowing at which these credits could have been sought in the absence of aid, the real value of these credits, the paper shows by using a shadow grant element approach, was negative.

Suggested Citation

  • Ibrahim Hassan Yassin, 1991. "Aid-tying and the Real Value of Foreign Assistance: The Case of the Sudan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 30(2), pages 189-206.
    • Handle: RePEc:pid:journl:v:30:y:1991:i:2:p:189-206
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    References listed on IDEAS

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    1. A. P. Thirlwall, 1989. "Growth and Development," Palgrave Macmillan Books, Palgrave Macmillan, edition 0, number 978-1-349-19837-5, May.
    2. Yassin, Ibrahim H., 1982. "`When is trade more valuable than aid?': Revisited," World Development, Elsevier, vol. 10(2), pages 161-166, February.
    3. Ibrahim Hassan Yassin, 1989. "The Estimation of the Grant Element of Loans Reconsidered," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 28(2), pages 121-132.
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