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Does better governance and commitment to development attract general budget support?

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Abstract

General budget support (GBS) is funding which is not earmarked for a specific sector or project, but is provided as direct financial support to the public sector in the recipient country. This type of aid is argued to have a positive effect on aid efficiency if it is targeted at countries with good governance and a strong commitment to development. In this study, data on commitments of official development assistance (ODA) from 23 DAC donors to 115 recipient countries in the period from 1995 to 2009 is used to estimate the probability of receiving GBS. The results show that the DAC donors are selective with respect to the quality of governance, and there is some support for the notion that the recipient governments’ commitment to development is a significant determinant for the allocation of GBS. Empirical evidence showing that DAC donors are more selective when allocating GBS than with program aid in total is also presented, underlining the importance of using disaggregated data when analyzing aid allocation.

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  • Nordtveit, Ingvild, 2014. "Does better governance and commitment to development attract general budget support?," Working Papers in Economics 02/14, University of Bergen, Department of Economics.
    • Handle: RePEc:hhs:bergec:2014_002
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    Cited by:

    1. Rudolph, Alexandra, 2017. "The concept of SDG-sensitive development cooperation: implications for OECD-DAC members," IDOS Discussion Papers 1/2017, German Institute of Development and Sustainability (IDOS).

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    More about this item

    Keywords

    aid allocation; general budget support; good governance; commitment to development;
    All these keywords.

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid

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