Foreign Aid and Recurrent Cost : Donor Competition , Aid Proliferation and Budget Support ∗

  title={Foreign Aid and Recurrent Cost : Donor Competition , Aid Proliferation and Budget Support ∗},
  author={Yutaka Arimoto and Hisaki Kono},
Recent empirical studies reveal that effectiveness of aid on growth is ambiguous. This paper considers aid proliferation excess aid investment relative to recurrent cost as a potential cause that undermines aid effectiveness, because aid projects can only produce sustainable benefits when sufficient recurrent costs are disbursed. We consider the donor’s budget support as a device to supplement the shortage of the recipient’s recurrent cost and to alleviate the misallocation of inputs. However… CONTINUE READING

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