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How much foreign aid given to PNG has stayed within the sectors to which it has been allocated and how much has it allowed the PNG Government to free up its own resources for other spending priorities?

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  • Aaron Batten

Abstract

This paper measures the extent to which donor finance has contributed to higher rates of spending in three key development sectors of the PNG economy—health, education and infrastructure between 1974 and 2008. Results show that high rates of fungibility have occurred within PNG during this time. The PNG Government has placed the least priority on additional rates of health spending and most priority on additional infrastructure spending, although all sectors have increased by only a fraction of the amount of aid given. The results also compare the impact of budget support vis-à-vis project and program aid to induce higher rates of spending in each of these sectors. A number of policy implications follow.

Suggested Citation

  • Aaron Batten, 2009. "How much foreign aid given to PNG has stayed within the sectors to which it has been allocated and how much has it allowed the PNG Government to free up its own resources for other spending priorities," International and Development Economics Working Papers idec09-05, International and Development Economics.
  • Handle: RePEc:idc:wpaper:idec09-05
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    File URL: https://crawford.anu.edu.au/degrees/idec/working_papers/IDEC09-05.pdf
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    References listed on IDEAS

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    1. Nicolas Van de Sijpe, 2013. "Is Foreign Aid Fungible? Evidence from the Education and Health Sectors," World Bank Economic Review, World Bank Group, vol. 27(2), pages 320-356.
    2. 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.
    3. Swaroop, Vinaya & Jha, Shikha & Sunil Rajkumar, Andrew, 2000. "Fiscal effects of foreign aid in a federal system of governance: The case of India," Journal of Public Economics, Elsevier, vol. 77(3), pages 307-330, September.
    4. Feeny, Simon, 2007. "Foreign Aid and Fiscal Governance in Melanesia," World Development, Elsevier, vol. 35(3), pages 439-453, March.
    5. 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.
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