Aid And Public Expenditure In Africa

Course ID
Ethiopian Economics Association (EEA)
Susanna Wolf


Sub-Saharan Africa in general is not on track of meeting the Millennium Development Goals (MDGs) by 2015. Thus, a doubling of aid to Africa was agreed at the G-8 summit in 2005 in order to substantially improve the delivery of government services and investments in infrastructure. This expected increase in Aid to Africa will put a big challenge for public service delivery. As the efficiency of resource spending does not only depend on the capacities and characteristics of the recipient country but also on the quality of aid the main focus of this paper is on the effects of the volume and volatility of aid. ln addition the institutions related to public service delivery are taken into account, including freedom of press, corruption and decentralization. An analysis of a simultaneous equation model assesses the determinants of outcomes in health, education, water and sanitation, using data for up to 113 developing countries. Overall the share of ODA that is provided for education, health and water and sanitation seems to have a positive impact on outcomes in these sectors. However, total aid seems to be negatively associated to outcomes in these sectors, whereas aid volatility is associated with better outcomes in sanitation and infant mortality, contrary to expectations. This result could imply that although aid targeted to specific sectors and targets might have positive effects, the general increase in aid might create more problems with respect to Dutch disease, less accountability of governments towards local populations and more opportunities for corruption. Overall aid cannot be the only solution for improved service delivery to meet the MDGs, due to its mixed impact

Corporate Author: Getnet Alemu and Getachew Yoseph (Editor) & Ethiopian Economic Association/Ethiopian Economic Policy Research Institute
Publisher: Ethiopian Economic Association (EEA)
ISBN/ISSN: 978-9994-54-03-7
Primary Descriptors:

Public Expenditure

Secondary Descriptor:

Hiv /Aids

Geographic Descriptors: Africa
Cataloge Date: 02/27/2013
Broad Subject heading: Health
Call Number: 330.963 PRO 2007
Serial Key Title: Proceedings of the Fourth International Conference on the Ethiopian Economy
Publication catagory: International Conference
Content type: EEA Publication
Volume: I
Publication date: 2013-05-27 00:00:00
Forum or Discussion date: 2013-02-27 00:00:00
PDF file:  Susanna Wolf_ AID and Public Expenditure in Africa.pdf
Place of publication: Addis Ababa, Ethiopia
Type of material: Book
Current frequency: Annualy
Author: Susanna Wolf

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