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Big Push versus Absorptive Capacity: How to Reconcile the Two Approaches

Author

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  • Patrick Guillaumont
  • Sylviane Guillaumont Jeanneney

Abstract

In this paper we examine whether absorptive capacity can constitute sufficient justification for rejecting the proposal of a large aid increase to support the 'big push'. We argue that the probability of a poverty trap exists for many countries, in particular the least developed countries (LDCs) and that an increase in aid is relevant for them. Moreover we show that the decrease in marginal aid returns is slower in vulnerable countries, which supports the rationale to include vulnerability as one of the aid allocation criteria.

Suggested Citation

  • Patrick Guillaumont & Sylviane Guillaumont Jeanneney, 2007. "Big Push versus Absorptive Capacity: How to Reconcile the Two Approaches," WIDER Working Paper Series DP2007-05, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:dp2007-05
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    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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