We analyze the growth impact of official development assistance to developing countries. Our approach is different from that of previous studies in two major ways. First, we disentangle the effects of two kinds of aid: developmental and non-developmental. Second, our specifications allow for the effect of aid on economic growth to occur over long periods. Our results indicate that developmental aid promotes long-run growth. The effect is significant, large and robust to different specifications and estimation techniques.
that aid is inherently ineffective and aid budgets should be reduced. On the contrary, an increase in aid and a change in its composition in favor of developmental aid are likely to create sizable returns in the long run. Further, by showing that donorcharacteristics may matter for aid effectiveness, the study calls into question the trend towards greater aid selectivity based on an exclusive focus on recipient countries’ characteristics (such as institutional characteristics and macroeconomic policies). At a minimum, the quality of the donor-recipient match may
and in coordinating technical cooperation.
A recent study finds a strong relationship between the quality of country public financial management (PFM) systems and donors’ use of those systems ( figure 4.7 ). 32 The quality of PFM systems remains significant when controlling for donorcharacteristics, other recipient characteristics, and the donor share of aid in country. The study also finds that when donors have a larger presence in a country, they have a larger stake in overall country outcomes and in using country systems, which in turn strengthens country
main instruments for financing the country’s budget and is set to evolve into a major source of technical assistance and investment support for Afghanistan. The ARTF is managed by the World Bank and currently receives funding from 21 donors.
Characteristics of the ARTF
1. Coverage . Within the framework of the government budget, the ARTF provides pooled foreign financing for: salaries and other recurrent costs; investment activities and programs, including quick-impact recovery projects; and costs associated with the return of expatriate experts and training
Intermittent civil wars have largely destroyed Liberia's physical and economic structures and the government's capacity to devise and implement policies. Executive Directors expressed concern about the weak revenue performance, lack of progress on fiscal transparency, and accountability. They emphasized the need to accelerate structural reforms, welcomed the National Transitional Government of Liberia’s resumption of regular token monthly payments to the IMF, and suggested that continued cooperation with the IMF and implementation of sound policies will facilitate the development of a Staff-Monitored Program.