2018 Public administration

Budget Support, Poverty and Corruption: A Review of the Evidence

Geske Dijkstra

The Expert Group for Aid Studies (EBA) report Budget support, poverty and corruption: a review of the evidence shows that budget support has been an effective way of reducing poverty.

Budget support is aid that the recipient country’s govern-ment can freely make use of. It is usually accompanied by a policy dialogue. Recent years have seen a sharp reduction in the volume of budget support from Sweden and other donor countries.

Professor Dijkstra summarises available research and evaluations, and concludes that the reduced volume of budget support cannot be justified on the basis of the ineffectiveness of the instrument.

Budget support has decreased in Sweden and among other donors in recent years. Figure from the report, p.25.

THE REPORT FINDS THAT BUDGET SUPPORT PRODUCES THE FOLLOWING POSITIVE EFFECTS::

Reduced poverty, particularly that which is non-income based.
Stronger institutions that monitor corruption, which has led to the detection of corruption. There is no research evidence showing that budget support has contributed to increased corruption.
Improved public financial management and supervision of social institutions on the part of recipients.
More children attend school and complete their education and better access to health care, water and sanitation.
Reduced transaction costs linked to the support.

THE REPORT FINDS THAT BUDGET SUPPORT HAS NOT BEEN EFFECTIVE IN:

Changing the political governance of recipient countries.
Encouraging the recipient countries to respect human rights.

REPORT AUTHOR:

Geske Dijkstra is Professor in Governance and Global Development at Erasmus University Rotterdam.