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Budget Support & Coordination of Foreign Aid - Correlation Studies of Coordination Problems

Lorentzon, Louise LU (2011) NEKK01 20102
Department of Economics
Abstract
Coordination failure is stressed as one of the most critical causes to ineffective foreign aid. Budget support is argued to improve and facilitate coordination of foreign aid, why it is an increasingly used disbursement channel. However, there is little empirical studies of budget support and aid effectiveness.

The purpose of this essay is to study if the use of budget support correlates with some characteristics and possible causes to coordination failure in foreign aid. This study brings us closer to determine if budget support improved coordination. The essay examines four hypothesis of how budget support correlates with three different coordination problems. These are: aid fungibility, overlaps and aid predictability. To test the... (More)
Coordination failure is stressed as one of the most critical causes to ineffective foreign aid. Budget support is argued to improve and facilitate coordination of foreign aid, why it is an increasingly used disbursement channel. However, there is little empirical studies of budget support and aid effectiveness.

The purpose of this essay is to study if the use of budget support correlates with some characteristics and possible causes to coordination failure in foreign aid. This study brings us closer to determine if budget support improved coordination. The essay examines four hypothesis of how budget support correlates with three different coordination problems. These are: aid fungibility, overlaps and aid predictability. To test the hypothesis, I depict cross-country data from the OECD Creditor Reporting System (online database) and the World Bank (online data, indicators), in scatter plots.

The results do not show strong correlations between budget support and coordination failures. This may indicate that budget support does not reduce these coordination failures. First, I find a weak correlation between the share of budget support, and the proportions of aid and recipient budget. This result indicates that proportions of budgets as a cause to fungibility, is not important to donors in their decisions whether to use budget support or not. Further, no correlation is found between overlaps and budget support. Lastly, there is no indication that aid predictability correlates with budget support. (Less)
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author
Lorentzon, Louise LU
supervisor
organization
course
NEKK01 20102
year
type
M2 - Bachelor Degree
subject
keywords
predictability, fungibility, coordination, budget support, overlaps
language
English
id
1775010
date added to LUP
2011-02-14 15:24:35
date last changed
2011-02-14 15:24:35
@misc{1775010,
  abstract     = {Coordination failure is stressed as one of the most critical causes to ineffective foreign aid. Budget support is argued to improve and facilitate coordination of foreign aid, why it is an increasingly used disbursement channel. However, there is little empirical studies of budget support and aid effectiveness. 

The purpose of this essay is to study if the use of budget support correlates with some characteristics and possible causes to coordination failure in foreign aid. This study brings us closer to determine if budget support improved coordination. The essay examines four hypothesis of how budget support correlates with three different coordination problems. These are: aid fungibility, overlaps and aid predictability. To test the hypothesis, I depict cross-country data from the OECD Creditor Reporting System (online database) and the World Bank (online data, indicators), in scatter plots. 

The results do not show strong correlations between budget support and coordination failures.  This may indicate that budget support does not reduce these coordination failures. First, I find a weak correlation between the share of budget support, and the proportions of aid and recipient budget. This result indicates that proportions of budgets as a cause to fungibility, is not important to donors in their decisions whether to use budget support or not. Further, no correlation is found between overlaps and budget support. Lastly, there is no indication that aid predictability correlates with budget support.},
  author       = {Lorentzon, Louise},
  keyword      = {predictability,fungibility,coordination,budget support,overlaps},
  language     = {eng},
  note         = {Student Paper},
  title        = {Budget Support & Coordination of Foreign Aid - Correlation Studies of Coordination Problems},
  year         = {2011},
}