TY  - BOOK
AU  - Guillaumont,Patrick
AU  - Guillaumont,Patrick
AU  - Laajaj,Rachid
TI  - When Instability Increases The Effectiveness of Aid Projects
PY  - 2006///
CY  - Washington, D.C.
PB  - The World Bank
KW  - Aid
KW  - Aid Allocation
KW  - Aid Flows
KW  - Banks and Banking Reform
KW  - Development
KW  - Development Assistance
KW  - Development Economics and Aid Effectiveness
KW  - Development Issues
KW  - Development Objectives
KW  - Development Projects
KW  - Development Research
KW  - Economic Development
KW  - Economic Growth
KW  - Economic Instability
KW  - Exports
KW  - Inflation
KW  - International Aid
KW  - International Development
KW  - Macroeconomics and Economic Growth
KW  - Needs
KW  - Priorities
KW  - Projects
KW  - Sustainability
N2  - The authors assess the effect of economic instability on the success of projects funded by the World Bank using the outcome of the projects, which is a notation of their overall success determined by the Bank's Independent Evaluation Group. It has been argued in macroeconomic studies that aid effectiveness is higher in vulnerable countries because it dampens the negative effects of shocks. The authors show that this finding is not inconsistent with the observation that the success of the projects is lower in an unstable environment. Instability, in particular the instability of exports, harms aid projects as it harms the rest of the economy, while the success of projects decreases when the total amount of aid received increases, due to absorptive capacity limitations. But this decrease is slower when instability is higher, showing a positive effect of aid through its stabilizing impact. The authors find the same results keeping only the projects funded by nonconcessionary loans, which suggests that the cushioning effect of aid extends not only to aid funded projects but to whole sets of projects. Corroborating macroeconomic findings, their results lead to the same conclusion that more aid should be allocated to more vulnerable countries, in spite of the lower success of the projects in an unstable environment: project evaluations cannot include the macrostabilizing effect of the aid delivered through projects
UR  - http://elibrary.worldbank.org/doi/book/10.1596/1813-9450-4034
ER  -