Chapter

Enhancing Effective Utilization of Aid in Fragile States

Sanjeev Gupta

in Fragile States

Published in print September 2011 | ISBN: 9780199693153
Published online January 2012 | e-ISBN: 9780191731990 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199693153.003.0010

Series: WIDER Studies in Development Economics

Enhancing Effective Utilization of Aid in Fragile States

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This chapter 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.

Keywords: aid absorption; aid flows; institutions; post-conflict

Chapter.  6902 words.  Illustrated.

Subjects: Economic Development and Growth

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