Budget Support Versus Project Aid

Should donors who are interested in the effectiveness of developmental programs rely on conditional budget support or on project aid? To answer this question, we present a model in which only a subset of the developmental expenditures can be subject to conditionality. We show that budget support is...

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Bibliographic Details
Main Author: Cordella, Tito
Other Authors: Dell'Ariccia, Giovanni
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2003
Series:IMF Working Papers
Subjects:
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
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653 |a Capital investments 
653 |a Banks 
653 |a Finance 
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653 |a Budget Systems 
653 |a Public finance & taxation 
653 |a Industries: Financial Services 
653 |a Exports and Imports 
653 |a Other Public Investment and Capital Stock 
653 |a Mortgages 
653 |a Budgeting 
653 |a Social Services and Welfare 
653 |a Welfare, Well-Being, and Poverty: General 
653 |a Foreign aid 
653 |a Budget 
653 |a Public financial management (PFM) 
653 |a National Budget 
653 |a Fiscal and Monetary Policy in Development 
653 |a Depository Institutions 
653 |a National Government Expenditures and Related Policies: Infrastructures 
653 |a Provision and Effects of Welfare Program 
653 |a Financial institutions 
653 |a Micro Finance Institutions 
653 |a Budget planning and preparation 
653 |a Asymmetric and Private Information 
653 |a Poverty reduction 
653 |a International economics 
653 |a Social welfare & social services 
653 |a Expenditure 
653 |a Loans 
653 |a Foreign Aid 
653 |a Capital spending 
653 |a Economic Growth and Aggregate Productivity: General 
653 |a Poverty 
653 |a Budgeting & financial management 
653 |a Project loans 
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653 |a Government Policy 
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520 |a Should donors who are interested in the effectiveness of developmental programs rely on conditional budget support or on project aid? To answer this question, we present a model in which only a subset of the developmental expenditures can be subject to conditionality. We show that budget support is preferable to project aid when donors and recipients' preferences are aligned, and when assistance is small relative to recipients' resources. Then, we test our model estimating a modified growth model for a panel of developing countries, and find evidence in support of our predictions