How defensive were lending and aid to HIPC?
We investigate whether defensive lending and defensive granting motivated the transfer of resources by official donors to low income countries. We estimate a dynamic panel of 75 low-income IDA and IDA-Blend countries for the period 1982 to 2008, where the sample includes 41 HIPC and a control group of other 34 low- income countries. Our results point to no evidence of defensive lending as opposed to strong evidence of defensive granting. Both bilateral and multilateral donors reduce their loans as the debt they hold increases (where such “correction” is actually weaker in the case of multilateral loans to HIPC). Official donors provide more grants as multilateral debt increases where this effect is significant only for debt- ridden HIPC countries. This result is consistent with a substitution of grants for loans and the new approach to debt sustainability, but questions the efficiency and selectivity of the aid policy.
|Date of creation:||Feb 2012|
|Date of revision:||Feb 2012|
|Contact details of provider:|| Postal: Piazza Ateneo Nuovo, 1 Milano 20126|
Phone: +39 02 6448 3089
Fax: +39 02 6448 3085
Web page: http://dems.unimib.it
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dollar, David & Alesina, Alberto, 2000.
"Who Gives Foreign Aid to Whom and Why?,"
4553020, Harvard University Department of Economics.
- Nancy Birdsall & Stijn Claessens & Ishac Diwan, 2003.
"Policy Selectivity Forgone: Debt and Donor Behavior in Africa,"
World Bank Economic Review,
World Bank Group, vol. 17(3), pages 409-435, December.
- Nancy Birdsall & Stijn Claessens & Ishac Diwan, 2002. "Policy Selectivity Foregone: Debt and Donor Behavior in Africa," Working Papers 17, Center for Global Development.
- Henry, Peter B. & Arslanalp, Serkan, 2003.
"Helping the Poor to Help Themselves: Debt Relief or Aid?,"
1838, Stanford University, Graduate School of Business.
- Serkan Arslanalp & Peter Blair Henry, 2004. "Helping the Poor to Help Themselves: Debt Relief or Aid," NBER Working Papers 10230, National Bureau of Economic Research, Inc.
- Alberto Alesina & Beatrice Weder, 1999.
"Do Corrupt Governments Receive Less Foreign Aid?,"
NBER Working Papers
7108, National Bureau of Economic Research, Inc.
- Easterly, William, 1999. "How did highly indebted poor countries become highly indebted? : reviewing two decades of debt relief," Policy Research Working Paper Series 2225, The World Bank.
- William Easterly, 2002. "The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262550423, December.
- Collier, Paul & Hoeffler, Anke, 2004.
"Aid, policy and growth in post-conflict societies,"
European Economic Review,
Elsevier, vol. 48(5), pages 1125-1145, October.
- Collier, Paul & Hoeffler, Anke, 2002. "Aid, policy, and growth in post-conflict societies," Policy Research Working Paper Series 2902, The World Bank.
- Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-26, November.
- Easterly, William & Levine, Ross, 2003.
"Tropics, germs, and crops: how endowments influence economic development,"
Journal of Monetary Economics,
Elsevier, vol. 50(1), pages 3-39, January.
- William Easterly & Ross Levine, 2002. "Tropics, Germs, and Crops: How Endowments Influence Economic Development," Working Papers 15, Center for Global Development.
- William Easterly & Ross Levine, 2002. "Tropics, Germs, and Crops: How Endowments Influence Economic Development," NBER Working Papers 9106, National Bureau of Economic Research, Inc.
- Serkan Arslanalp & Peter Blair Henry, 2005.
"Is Debt Relief Efficient?,"
Journal of Finance,
American Finance Association, vol. 60(2), pages 1017-1051, 04.
- Collier, Paul & Dollar, David, 1999.
"Aid allocation and poverty reduction,"
Policy Research Working Paper Series
2041, The World Bank.
- Knack, Stephen & Keefer, Philip, 1995. "Institutions and Economic Performance: Cross-Country Tests Using Alternative Institutional Indicators," MPRA Paper 23118, University Library of Munich, Germany.
- Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 681-712.
- Tito Cordella & Giovanni Dell'Ariccia, 2003. "Budget Support Versus Project Aid," IMF Working Papers 03/88, International Monetary Fund.
- Judson, Ruth A. & Owen, Ann L., 1999. "Estimating dynamic panel data models: a guide for macroeconomists," Economics Letters, Elsevier, vol. 65(1), pages 9-15, October.
- Baltagi, Badi H. & Li, Qi, 1995. "Testing AR(1) against MA(1) disturbances in an error component model," Journal of Econometrics, Elsevier, vol. 68(1), pages 133-151, July.
- Frey, Bruno S. & Schneider, Friedrich, 1986. "Competing models of international lending activity," Journal of Development Economics, Elsevier, vol. 20(2), pages 225-245, March.
- Renard, Robrecht & Cassimon, Danny, 2001. "On the Pitfalls of Measuring Aid," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
- Nancy Birdsall & John Williamson, 2002. "Delivering on Debt Relief: From IMF Gold to a New Aid Architecture," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 337, January.
When requesting a correction, please mention this item's handle: RePEc:mib:wpaper:220. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Matteo Pelagatti)
If references are entirely missing, you can add them using this form.