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Crushed Aid: Fragmentation in Sectoral Aid

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  • Frot, Emmanuel

    () (Stockholm Institute of Transition Economics)

  • Santiso, Javier

    () (OECD Development Centre)

Abstract

This paper measures and compares fragmentation in aid sectors. Past studies focused on aggregate country data but a sector analysis provides a better picture of fragmentation. We start by counting the number of aid projects in the developing world and find that, in 2007, more than 90 000 projects were running simultaneously. Project proliferation is on a steep upward trend and will certainly be reinforced by the emergence of new donors. Developing countries with the largest numbers of aid projects have more than 2 000 in a single year. In parallel to this boom of aid projects, there has been a major shift towards social sectors and, as a consequence, these are the most fragmented. We quantify fragmentation in each aid sector for donors and recipients and identify which exhibit the highest fragmentation. While fragmentation is usually seen as an issue when it is excessive, we also show that some countries suffer from too little fragmentation. An original contribution of this paper is to develop a monopoly index that identifies countries where a donor enjoys monopoly power. Finally, we characterise countries with high fragmentation levels. Countries that are poor, democratic and have a large population get more fragmented aid. However, this is only because poor and democratic countries attract more donors. Once we control for the number of donors in a country-sector, democratic countries do not appear different from non-democratic ones in any sector and poor countries actually have a slightly less fragmented aid allocation.

Suggested Citation

  • Frot, Emmanuel & Santiso, Javier, 2009. "Crushed Aid: Fragmentation in Sectoral Aid," SITE Working Paper Series 6, Stockholm School of Economics, Stockholm Institute of Transition Economics.
  • Handle: RePEc:hhs:hasite:0006
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    References listed on IDEAS

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    1. repec:spr:revint:v:12:y:2017:i:2:d:10.1007_s11558-017-9275-2 is not listed on IDEAS
    2. Masaki, Takaaki & van de Walle, Nicolas, 2014. "The impact of democracy on economic growth in sub-Saharan Africa, 1982-2012," WIDER Working Paper Series 057, World Institute for Development Economic Research (UNU-WIDER).
    3. Peter Nunnenkamp & Rainer Thiele, 2013. "Financing for Development: The Gap between Words and Deeds since Monterrey," Development Policy Review, Overseas Development Institute, vol. 31(1), pages 75-98, January.
    4. Gómez-Echeverri, Luis, 2013. "Foreign Aid and Sustainable Energy," WIDER Working Paper Series 093, World Institute for Development Economic Research (UNU-WIDER).
    5. Laura Pöntinen, 2015. "Sectoral Allocation of Aid: What Has Changed?," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 12(4), pages 58-60, 01.
    6. repec:unu:wpaper:wp2012-69 is not listed on IDEAS
    7. Knack, Stephen & Smets, Lodewijk, 2013. "Aid Tying and Donor Fragmentation," World Development, Elsevier, vol. 44(C), pages 63-76.
    8. Wim Naudé, 2011. "Foreign Aid for Innovation: The Missing Ingredient in Private Sector Development?," Working Papers 2011/35, Maastricht School of Management.
    9. Acharya, Arnab & Martínez-Álvarez, Melisa, 2012. "Aid Effectiveness in the Health Sector," WIDER Working Paper Series 069, World Institute for Development Economic Research (UNU-WIDER).
    10. Kilama, Eric Gabin, 2016. "The influence of China and emerging donors aid allocation: A recipient perspective," China Economic Review, Elsevier, vol. 38(C), pages 76-91.
    11. repec:eee:wdevel:v:99:y:2017:i:c:p:320-334 is not listed on IDEAS
    12. Kilby, Christopher, 2011. "What Determines the Size of Aid Projects?," World Development, Elsevier, vol. 39(11), pages 1981-1994.
    13. Kai Gehring & Katharina Michaelowa & Axel Dreher & Franziska Spörri, 2015. "Do we know what we think we know? Aid fragmentation and effectiveness revisited," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 185, Courant Research Centre PEG.
    14. Furukawa, Mitsuaki, 2014. "Aid Fragmentation and Effectiveness for Infant and Child Mortality and Primary School Completion," Working Papers 83, JICA Research Institute.
    15. Leiderer, Stefan, 2013. "Donor Coordination for Effective Government Policies? Implementation of the New Aid Effectiveness Agenda in Health and Education in Zambia," WIDER Working Paper Series 049, World Institute for Development Economic Research (UNU-WIDER).
    16. Molenaers, Nadia & Renard, Robrecht & Gagiano, Anna, 2013. "The Quest for Aid Complimentarity: Nordic+ Donors and NGO-cofunding Reforms," IOB Working Papers 2013.09, Universiteit Antwerpen, Institute of Development Policy (IOB).
    17. Furukawa, Mitsuaki, 2014. "Management of the International Development Aid System Aid System and the Creation of Political Space for China:The Case of Tanzania," Working Papers 82, JICA Research Institute.
    18. Furukawa, Mitsuaki & Mikami, Satoru, 2014. "Is Country-system-based Aid Really Better than Project-based Aid? Evidence from Rural Water Supply Management in Uganda," Working Papers 64, JICA Research Institute.
    19. Stefan Leiderer, 2015. "Donor Coordination for Effective Government Policies?," Journal of International Development, John Wiley & Sons, Ltd., vol. 27(8), pages 1422-1445, November.
    20. Amanda Glassman, Denizhan Duran, 2012. " An Index of the Quality of Official Development Assistance in Health - Working Paper 287," Working Papers 287, Center for Global Development.
    21. Auriol, Emmanuelle & Miquel-Florensa, Josepa, 2015. "Taxing Fragmented Aid to Improve Aid Efficiency," CEPR Discussion Papers 10802, C.E.P.R. Discussion Papers.
    22. Han, Lu & Koenig-Archibugi, Mathias, 2015. "Aid Fragmentation or Aid Pluralism? The Effect of Multiple Donors on Child Survival in Developing Countries, 1990–2010," World Development, Elsevier, vol. 76(C), pages 344-358.

    More about this item

    Keywords

    Aid; Fragmentation;

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid

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