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UNU-WIDER Enhancing Effective Utilization of Aid in Fragile States

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A teenager wears torn rubber boots in a muddy local market in Bac Ha, Viet Nam. As of 2005 figures, half the world population—more than 3 billion people–is estimated to live on less than USD 2.50 a day. Bac Ha, Viet Nam. UN Photo/Kibae Park.

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Enhancing Effective Utilization of Aid in Fragile States

This paper explores the macroeconomic implications of aid flows in countries with weak institutions. It argues that these countries should take into account their overall macroeconomic position, their capacity to absorb aid at the sectoral and subnational levels, and the strength of their fiscal institutions in deciding how much and how fast to spend aid. These considerations may warrant a gradual use of aid, except when aid is provided for humanitarian purposes. There is some basis for frontloading spending for countries emerging from a conflict, otherwise fragile states should seek to smoothen their spending against the background of aid volatility and uncertainty.
Publisher:
UNU-WIDER
Series:
WIDER Research Paper
Volume:
2008/07
Title:
Enhancing Effective Utilization of Aid in Fragile States
Authors:
Sanjeev Gupta
Publication date:
February 2008
ISSN Web:
1810-2611
ISBN 13 Web:
9789292300494
Copyright holder:
© UNU-WIDER
Copyright year:
2008
Keywords:
aid absorption, aid flows, institutions, post-conflict
JEL:
F35, O19, O11
Project:
Fragility and Development
Sponsor:
The governments of Denmark (Royal Ministry of Foreign Affairs), Finland (Ministry for Foreign Affairs), Norway (Royal Ministry of Foreign Affairs), Sweden (Swedish International Development Cooperation Agency — Sida) and the United Kingdom (Department for International Development).
Format:
online

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