Aid Disaggregation and the Public Sector in Aid-Recipient Economies: Some Evidence from Cote D'Ivoire

The present paper examines the impact of different aid types, namely project aid, program aid, technical assistance, and food aid on the fiscal sector of the aid-recipient economy by using time-series data for Côte d'Ivoire over the period 1975-99. Our empirical results show that when a single value (or aggregated) for aid is used, foreign aid is fully consumed in the case of Côte d'Ivoire. However, results obtained under the assumption of aid heterogeneity clearly suggest that the government responds differently according to the nature of the aid inflows. Our approach tries to illuminate the response of the aid-recipient government to different categories of foreign aid inflows and the empirical findings clearly demonstrate the importance of the aid disaggregation approach for delving deeper into aid effectiveness issues. Copyright © 2006 The Authors; Journal compilation © 2006 Blackwell Publishing Ltd.