Songhee Han (p), Jinhwan Oh

Eleonora Cutrini

This paper empirically investigates the effectiveness of aid modality, referring to Tanzanian cases. Using a comprehensive panel data covering 124 countries for 11 years (from 2006 to 2016), this study contributes to the aid effectiveness literature by combining the two approaches (adding fiscal response approach to the traditional one with growth rates) with two main aid modalities (project-type intervention and program-based approach). With respect to growth, both modalities didn’t exert a positive significant effect. The fact that both of the aid modalities are not very effective is not actually a surprising finding, as it was already shown by previous studies. In terms of fiscal response - i.e. the effect of aid on recipient government’s budget spending behavior, however, both modalities indeed appeared to increase public expenditure in partner countries. This study also examines Tanzanian cases, which is one of the most active countries applying program-based approach to its aid system. As empirical results show, Tanzania’s program-based approach, specifically result-based approach as an advanced version of program-based approach, is positively related to government expenditure and this ultimately leads to better quality of life. This article implies that the pathway of change from aid to economic growth is longer and more complex than that of aid to government expenditure.

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Christian Düben (p), Sandra Achten , Melanie Krause

Eleonora Cutrini

see extended abstract