Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/98410 
Year of Publication: 
2014
Series/Report no.: 
Kiel Working Paper No. 1933
Publisher: 
Kiel Institute for the World Economy (IfW), Kiel
Abstract: 
Aid flows continue to be volatile and unpredictable, even though it is widely accepted that this erodes the effectiveness of foreign aid. We argue that fragmented donor-recipient relationships, notably the large number of minor aid relations that tend to be associated with donors' desire to have 'fly their flag' around the world, increase aid unpredictability. Our empirical analysis of the determinants of aid unpredictability suggests that aid becomes less predictable with more fragmented donor-recipient relationships. Specifically, the effect of fragmentation on overshooting previous spending plans is statistically highly significant and substantively important. In contrast, fragmented donor-recipient relationships have no effect on the shortfall of actual aid compared to donors' spending plans.
Subjects: 
aid predictability
donor fragmentation
forward spending plans
JEL: 
F35
Document Type: 
Working Paper

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