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Foreign aid and economic development : Aid fungibility in Malawi

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Frame of Image LICY IN ECONOMIC DEVELOPMENT
2013 Professor Kim, Taejong
ABSTRACT
FOREIGN AID AND ECONOMIC DEVELOPMENT: AID FUNGIBILITY IN MALAWI
BY MSOWOYA, Chimwemwe Don
This paper sets out to produce credible empirical evidence on aid fungibility in Malawi. To this end, the paper looks at two forms of fungibility namely: substitution of aid for government funding; and whether or not aid is used to reduce taxes effort in Malawi. First and foremost, the paper investigates whether or not aid resources substitute for government funding in three key sectors that traditionally receive the lion’s share of Official Development Assistance in Malawi namely; Agriculture, Education and Health sectors. Secondly, the paper also investigates whether or not aid resources substitute for government revenue collection efforts by examining the impact of ODA on tax effort in Malawi. The results of the fungibility analysis reveal that aid fungibility is prevalent most prevalent in the Ministry of Agriculture and not Education and Health. On the other hand, the results of the analysis of the impact of ODA on tax effort in Malawi show that ODA has a positive impact on the tax effort in Malawi which implies that aid resources are not used to substitute for tax revenue.
ACKNOWLEDGEMENTS
I would like to express my sincere gratitude to everyone that made this research paper possible. Firstly, I would like express my profound thanks to my supervisors, Professor Taejong Kim and Professor Kye Woo Lee, whose expert advi


Full Text
Title Foreign aid and economic development
Similar Titles
Sub Title

Aid fungibility in Malawi

Material Type Reports
Author(English)

Msowoya, Chimwemwe Don

Publisher

[Seoul]:KDI School of Public Policy and Management

Date 2013
Pages 87
Subject Country Malawi(Africa)
South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Economic Administration
Official Aid < Multi-Sector
Holding KDI School of Public Policy and Management

Abstract

This paper sets out to produce credible empirical evidence on aid fungibility in Malawi. To this end, the paper looks at two forms of fungibility namely: substitution of aid for government funding; and whether or not aid is used to reduce taxes effort in Malawi. First and foremost, the paper investigates whether or not aid resources substitute for government funding in three key sectors that traditionally receive the lion’s share of Official Development Assistance in Malawi namely; Agriculture, Education and Health sectors. Secondly, the paper also investigates whether or not aid resources substitute for government revenue collection efforts by examining the impact of ODA on tax effort in Malawi. The results of the fungibility analysis reveal that aid fungibility is prevalent most prevalent in the Ministry of Agriculture and not Education and Health. On the other hand, the results of the analysis of the impact of ODA on tax effort in Malawi show that ODA has a positive impact on the tax effort in Malawi which implies that aid resources are not used to substitute for tax revenue.