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Aid fungibility in Assessing Aid: red herring or true concern?

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  • Mark McGillivray
  • Oliver Morrissey

Abstract

This paper critically reviews Assessing Aid (World Bank, 1998), focussing on Chapter 3, which looks at public sector aspects of aid, specifically the issue of aid fungibility. Whilst Assessing Aid's focus on public sector aspects of aid is highly appropriate, it is based on a partial review of the literature and draws conclusions not entirely supported by the literature. We argue that fungibility itself is not an important concern, and distracts attention from what donors can do to ensure that more of their aid is allocated to areas that they want to support. Insufficient attention is paid to how aid impacts on public sector behaviour overall and how fiscal management can be improved. Copyright © 2000 John Wiley & Sons, Ltd.

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  • Mark McGillivray & Oliver Morrissey, 2000. "Aid fungibility in Assessing Aid: red herring or true concern?," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(3), pages 413-428, April.
  • Handle: RePEc:wly:jintdv:v:12:y:2000:i:3:p:413-428
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    File URL: https://doi.org/10.1002/(SICI)1099-1328(200004)12%3A3%3C413%3A%3AAID-JID659%3E3.0.CO%3B2-P
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    1. Pack, Howard & Pack, Janet Rothenberg, 1990. "Is Foreign Aid Fungible? The Case of Indonesia," Economic Journal, Royal Economic Society, vol. 100(399), pages 188-194, March.
    2. Robert Lensink & Oliver Morrissey, 2000. "Aid instability as a measure of uncertainty and the positive impact of aid on growth," Journal of Development Studies, Taylor & Francis Journals, vol. 36(3), pages 31-49.
    3. Pack, Howard & Pack, Janet Rothenberg, 1993. "Foreign Aid and the Question of Fungibility," The Review of Economics and Statistics, MIT Press, vol. 75(2), pages 258-265, May.
    4. Dollery, Brian E & Worthington, Andrew C, 1996. " The Empirical Analysis of Fiscal Illusion," Journal of Economic Surveys, Wiley Blackwell, vol. 10(3), pages 261-297, September.
    5. Cashel-Cordo, Peter & Craig, Steven G., 1990. "The public sector impact of international resource transfers," Journal of Development Economics, Elsevier, vol. 32(1), pages 17-42, January.
    6. Henrik Hansen & Finn Tarp, 2000. "Aid effectiveness disputed," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(3), pages 375-398, April.
    7. Gang, Ira N. & Ali Khan, Haider, 1990. "Foreign aid, taxes, and public investment," Journal of Development Economics, Elsevier, vol. 34(1-2), pages 355-369, November.
    8. Franco-Rodriguez, Susana & Morrissey, Oliver & McGillivray, Mark, 1998. "Aid and the Public Sector in Pakistan: Evidence with Endogenous Aid," World Development, Elsevier, vol. 26(7), pages 1241-1250, July.
    9. Khan, Haider Ali & Hoshino, Eiichi, 1992. "Impact of foreign aid on the fiscal behavior of LDC governments," World Development, Elsevier, vol. 20(10), pages 1481-1488, October.
    10. Howard White & Oliver Morrissey, 1997. "Conditionality When Donor And Recipient Preferences Vary," Journal of International Development, John Wiley & Sons, Ltd., vol. 9(4), pages 497-505.
    11. Zafar Iqbal, 1997. "Foreign Aid and the Public Sector: A Model of Fiscal Behaviour in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 36(2), pages 115-129.
    12. Feyzioglu, Tarhan & Swaroop, Vinaya & Zhu, Min, 1998. "A Panel Data Analysis of the Fungibility of Foreign Aid," World Bank Economic Review, World Bank Group, vol. 12(1), pages 29-58, January.
    13. Cullis, J G & Jones, P R & Morrissey, O, 1991. "Public Choice Perspectives on the Poll Tax," Economic Journal, Royal Economic Society, vol. 101(406), pages 600-614, May.
    14. Gemmell, Norman & Morrissey, Oliver & Pinar, Abuzer, 1999. "Fiscal illusion and the demand for government expenditures in the UK," European Journal of Political Economy, Elsevier, vol. 15(4), pages 687-704, November.
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