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Policy Selectivity Forgone: Debt and Donor Behavior in Africa

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  • Nancy Birdsall
  • Stijn Claessens
  • Ishac Diwan

Abstract

We assess the dynamics behind the high net resource transfers by donors and creditors to Sub-Saharan African countries. Analyzing the determinants of overall net transfers for a panel of 37 recipient countries in 1978--98, we find that country policies mattered little. Donors--especially bilateral donors--actually made greater transfers to countries with high debt, largely owed to multilateral creditors, when policies were "bad." We conclude that comprehensive debt relief has the potential, though not the certainty, to restore selectivity in support of good policies. That would make development assistance more effective going forward--and increase public support in donor countries. Copyright 2003, Oxford University Press.

Suggested Citation

  • Nancy Birdsall & Stijn Claessens & Ishac Diwan, 2003. "Policy Selectivity Forgone: Debt and Donor Behavior in Africa," The World Bank Economic Review, World Bank, vol. 17(3), pages 409-435, December.
    • Handle: RePEc:oup:wbecrv:v:17:y:2003:i:3:p:409-435
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    JEL classification:

    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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