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Article Dans Une Revue UNU-WIDER Discussion Paper Année : 2007

Big Push versus Absorptive Capacity. How to reconcile the Two Approaches

Résumé

In this paper we examine whether absorptive capacity can constitute sufficient justification for rejecting the proposal of a large aid increase to support the ‘big push'. We argue that the probability of a poverty trap exists for many countries, in particular the least developed countries (LDCs) and that an increase in aid is relevant for them. Moreover we show that the decrease in marginal aid returns is slower in vulnerable countries, which supports the rationale to include vulnerability as one of the aid-allocation criteria. We examine the main obstacles to absorptive capacity, such as disbursement constraints and short-term bottlenecks, macroeconomic problems, including loss in competitiveness and macroeconomic volatility, as well as the weakening of institutions. The general conclusion that we draw for reconciling the two approaches is that absorptive capacity strongly influenced by aid itself or by its modalities. The big push and absorptive capacity approaches cannot be reconciled without aid reform supported by an aid increase.
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Dates et versions

hal-00204840 , version 1 (15-01-2008)

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  • HAL Id : hal-00204840 , version 1

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Patrick Guillaumont, Sylviane Guillaumont Jeanneney. Big Push versus Absorptive Capacity. How to reconcile the Two Approaches. UNU-WIDER Discussion Paper, 2007, 2007/05, 23 p. ⟨hal-00204840⟩
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