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Evaluating the Concessionality of Tied Aid


  • Morrissey, O.
  • White, H.


The failure of aid to have a demonstrably positive impact on recipient growth is partly due to donor aid policies, in particular tying, which can have a number of negative effects on recipients. This problem is especially acute for mixed credits, where a contract is financed through a commercial package with an aid subsidy. This paper develops a simple analytical framework for valuing the grant element in aid and mixed credits, accounting directly for excess prices due to tying and also allowing for the relative benefit of aid versus exports as a source of foreign exchange for developing countries. The empirical usefulness of the approach is demonstrated by valuing the concessionality in British mixed credits over the period 1988-92. Copyright 1996 by Blackwell Publishers Ltd and The Victoria University of Manchester
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Morrissey, O. & White, H., 1995. "Evaluating the Concessionality of Tied Aid," Working Papers - Money, Finance & Development 53, Institute of Social Studies.
  • Handle: RePEc:iss:mfdwpr:53

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    Cited by:

    1. Nyoni, Timothy S., 1998. "Foreign Aid and Economic Performance in Tanzania," World Development, Elsevier, vol. 26(7), pages 1235-1240, July.
    2. Chao, Chi-Chur & Yu, Eden S. H., 1999. "Shadow prices and trade restrictions in a monetary economy," Journal of Macroeconomics, Elsevier, vol. 21(4), pages 755-764.
    3. Justin Yifu LIN & Yan WANG, 2015. "China’s Contribution to Development Cooperation: Ideas, Opportunities and Finances," Working Papers P119, FERDI.
    4. Lin, Justin Yifu & Wang, Yan, 2014. "China-Africa co-operation in structural transformation: Ideas, opportunities, and finances," WIDER Working Paper Series 046, World Institute for Development Economic Research (UNU-WIDER).

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