Foreign aid and government fiscal behaviour in low-income South Asian countries

Otim, Samuel

doi:10.1080/000368496328056

Cited by 39 publications

(25 citation statements)

References 8 publications

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“…Even getting these targets from unpublished government sources is not always easy. In view of the above problems, the established practice in line with previous empirical studies in the fiscal response literature is to approximate the targets by estimating them (see Gang and Khan, 1991;Khan and Hoshino, 1992;Otim, 1996;Franco-Rodriguez et al, 1998;McGillivray and Ahmed, 1999;Franco-Rodriguez, 2000;Mavrotas, 2002a;McGillivray, 2002;Mavrotas and Ouattara, 2003b among others), 18 although there is no agreed methodology on how to proceed with such estimations. In the present paper, the targets were derived from a co-integrating regression of vectors of exogenous regressors on each actual variable.…”

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confidence: 97%

Aid heterogeneity: looking at aid effectiveness from a different angle

Mavrotas

2005

J of Intl Development

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The paper uses an aid disaggregation approach to examine the impact of different aid modalities on the fiscal sector of the aid-recipient country. It uses time-series data on different types of development aid (project aid, programme aid, technical assistance and food aid) for Uganda, an important aid recipient in recent years, to estimate a model of fiscal response in the presence of aid which combines aid heterogeneity and endogenous aid. The empirical findings clearly suggest the importance of the above approach for delving deeper into aid effectiveness issues since different aid categories have different effects on key fiscal variables-an impact that could not be revealed if a single figure for aid were employed. Project and food aids appear to cause a reduction in public investment whereas programme aid and technical assistance are positively related to public investment. The same applies for government consumption. A negligible impact on government tax and non-tax revenues, and a strong displacement of government borrowing are also found. Copyright © 2005 John Wiley & Sons, Ltd.

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confidence: 97%

Aid heterogeneity: looking at aid effectiveness from a different angle

Mavrotas

2005

J of Intl Development

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“…For example, Dhakal et al (1996) failed to find any relationship between aid and economic growth in India, Nepal and Pakistan. Otim (1996), however, implicitly observed a positive relationship between aid and growth through government fiscal behavior in three South Asian countries. The apparent failure for observing any clear link between aid and growth may be attributed to several factors including small set of sample and mis-specified model that limit the effectiveness of these studies.…”

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confidence: 99%

Aid-Growth Nexus in South Asia: Evidence from Time Series and Panel Cointegration

Chowdhury

Das

2011

RAE

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Given the strong likelihood of a sharp decline in remittance flows because of the recent recession, coupled with limited access to the global capital market, foreign aid inflow in South Asia can play an important role in boosting economic growth in this region. In the existing literature, the relationship between foreign aid and per capita real GDP is rather inconclusive. Does aid work in South Asia? We answer this question for five economies in this region: Bangladesh, India, Nepal, Pakistan, and Sri Lanka. Using both country-specific time series and a recently developed panel cointegration procedure over the period 1976 to 2008, our results suggest a positive long run relationship between growth rate of per capita real GDP and aid as a percentage of GDP for four out of five countries. Hence, this investigation tends to support the aid effectiveness hypothesis for South Asian countries.

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“…The remaining target variables are estimated using cointegrating regression. This approach is used by Gang and Khan (1991), Khan and Hoshino (1992), Otim (1996), and Ahmed (2002). The parameters of the structural equations (15) - (21) are estimated using the nonlinear three-stage least squares (N3SLS) technique and the parameters of the reduced-form equations (22) - (28) are estimated using the ordinary least squares (OLS) technique.…”

Section: Data and Estimationmentioning

confidence: 99%

Aid and the Public Sector in East Africa: Endogenous and Disaggregated Aid

Salih

2012

IJEF

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This paper addresses the question of the relationship between foreign aid and the fiscal behavior of the public sector in developing countries. We treat aid as an endogenous variable in the public sector's utility maximization problem. We also disaggregate the aid variable into three components of official development assistance. Data on the East African countries Ethiopia, Sudan, Kenya, Tanzania, and Uganda for the period 1990-2009 is used to estimate the parameters of the model. The results indicate that aid increases both public investment and recurrent government expenditure. The results also show that aid reduces taxation and domestic borrowing. An incremental aid results in much higher reduction in domestic borrowing than the reduction in Taxation.

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Foreign aid and government fiscal behaviour in low-income South Asian countries

Cited by 39 publications

References 8 publications

Aid heterogeneity: looking at aid effectiveness from a different angle

Aid heterogeneity: looking at aid effectiveness from a different angle

Aid-Growth Nexus in South Asia: Evidence from Time Series and Panel Cointegration

Aid and the Public Sector in East Africa: Endogenous and Disaggregated Aid

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