Report in External Series
| 2002
Foreign aid and social sector spending in developing countries
(SNF-report no. 30)
Foreign aid is of critical importance for achieving the goal of providing basic social services to all mankind by 2015. If strategies for funding health and education are to be successful, understanding the link between aid and spending priorities in recipient countries is vital. Transfers might only have an income effect, with no impact on priorities. We test this hypothesis of no influence and find that it is not the general pattern. In particular, the most generous bilateral donors succeed in raising the budget shares of the social sectors using targeted aid. Our conjecture is that this is due to a combination of generous funding and differences relative to recipients in the prioritisation of social spending.
Magnus Hatlebakk
Senior Researcher; Coordinator: Poverty Dynamics
