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?
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.
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- 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.
- 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.
- Cashel-Cordo, P. & Craig, S.G., 1988. "The Public Sector Impact Of International Resource Transfers," Papers 24, Houston - Department of Economics.
- N. Van De Sijpe, 2010.
"Is foreign aid fungible? Evidence from the education and health sectors,"
Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium
10/688, Ghent University, Faculty of Economics and Business Administration.
- 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.
- Nicolas Van de Sijpe, 2010. "Is foreign aid fungible? Evidence from the education and health sectors," CSAE Working Paper Series 2010-38, Centre for the Study of African Economies, University of Oxford.
- Van de Sijpe, Nicolas, 2013. "Is foreign aid fungible ? evidence from the education and health sectors," Policy Research Working Paper Series 6346, The World Bank.
- Feeny, Simon, 2007. "Foreign Aid and Fiscal Governance in Melanesia," World Development, Elsevier, vol. 35(3), pages 439-453, March.
- 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, 04.
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