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Does better governance and commitment to development attract general budget support?

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    General budget support (GBS) is funding which is not earmarked for a specific sector or project, but is provided as direct financial support to the public sector in the recipient country. This type of aid is argued to have a positive effect on aid efficiency if it is targeted at countries with good governance and a strong commitment to development. In this study, data on commitments of official development assistance (ODA) from 23 DAC donors to 115 recipient countries in the period from 1995 to 2009 is used to estimate the probability of receiving GBS. The results show that the DAC donors are selective with respect to the quality of governance, and there is some support for the notion that the recipient governments’ commitment to development is a significant determinant for the allocation of GBS. Empirical evidence showing that DAC donors are more selective when allocating GBS than with program aid in total is also presented, underlining the importance of using disaggregated data when analyzing aid allocation.

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    File URL: http://www.uib.no/sites/w3.uib.no/files/attachments/02-2014.pdf
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    Paper provided by University of Bergen, Department of Economics in its series Working Papers in Economics with number 02/14.

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    Length: 50 pages
    Date of creation: 10 Apr 2014
    Date of revision:
    Handle: RePEc:hhs:bergec:2014_002
    Contact details of provider: Postal: Institutt for økonomi, Universitetet i Bergen, Postboks 7802, 5020 Bergen, Norway
    Phone: (+47)55589200
    Fax: (+47)55589210
    Web page: http://www.uib.no/econ/en
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