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Accounting for Vulnerability of African Countries in Performance Based Aid Allocation

Author

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  • Patrick GUILLAUMONT

    () (Ferdi)

  • Sylviane GUILLAUMONT JEANNENEY

    () (Ferdi)

Abstract

The African Development Bank allocates its concessional resources through a procedure which is mainly based on the quality of the beneficiary countries’ economic policy and governance. This allocation procedure relies mainly on the Performance-Based Allocation formula which can be criticized on two grounds. Firstly, the weight on economic policy and governance is viewed as being excessive. Secondly, it lacks transparency and consistency. We consider how to amend that formula so as to take into account certain common characteristics of many African countries. The main proposal is to augment the formula by an economic vulnerability criterion. The numerical simulations show that the introduction of the United Nations economic vulnerability index in the formula gives rise to allocations which not only account for post conflict situations but also inherent fragility. We also consider a lower population weight in order to address the problem of country size. This change helps avoid inconsistencies arising from the application of country allocation ceilings in the various stages of the computation. Finally, a few proposals concerning the African Development Fund’s support to regional integration are explored.Ici disponible en tant que document de travail de la Banque africaine de développement.

Suggested Citation

  • Patrick GUILLAUMONT & Sylviane GUILLAUMONT JEANNENEY, 2009. "Accounting for Vulnerability of African Countries in Performance Based Aid Allocation," Working Papers P08, FERDI.
  • Handle: RePEc:fdi:wpaper:688
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    File URL: http://www.ferdi.fr/sites/www.ferdi.fr/files/publication/fichiers/WP8_mise%20en%20page%20_African%20devlopment%20bank%20group.pdf
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    References listed on IDEAS

    as
    1. Jacky Amprou & Patrick Guillaumont & Sylviane Guillaumont Jeanneney, 2007. "Aid Selectivity According to Augmented Criteria," The World Economy, Wiley Blackwell, vol. 30(5), pages 733-763, May.
    2. Lisa Chauvet & Patrick Guillaumont, 2009. "Aid, Volatility, and Growth Again: When Aid Volatility Matters and When it Does Not," Review of Development Economics, Wiley Blackwell, vol. 13(s1), pages 452-463, August.
    3. Patrick GUILLAUMONT, 2008. "Adapting Aid Allocation Criteria to Development Goals," Working Papers P01, FERDI.
    4. Patrick Guillaumont, 2009. "An Economic Vulnerability Index: Its Design and Use for International Development Policy," Oxford Development Studies, Taylor & Francis Journals, vol. 37(3), pages 193-228.
    5. William Easterly, 2003. "Can Foreign Aid Buy Growth?," Journal of Economic Perspectives, American Economic Association, vol. 17(3), pages 23-48, Summer.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Guillaumont, Patrick & Guillaumont Jeanneney, Sylviane & Wagner, Laurent, 2017. "How to Take into Account Vulnerability in Aid Allocation Criteria and Lack of Human Capital as Well: Improving the Performance Based Allocation," World Development, Elsevier, vol. 90(C), pages 27-40.

    More about this item

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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