Foreign Aid, Public Savings Displacement and Aid Dependency in Cote d'Ivoire: An Aid Disaggregation Approach

This paper uses the fiscal response framework to investigate the extent to which different categories of foreign aid flows, namely project aid, programme aid, technical assistance and food aid, displace public savings and affect the recipient country's dependence on aid, using time series data for Cote d'Ivoire for the period 1975-99.The results indicate that, in general, project aid flows tend to reduce public savings and worsen Cote d'Ivoire's dependence on aid more than the other categories of aid flows. This finding therefore suggests that accounting for aid heterogeneity in aid studies as well as aid policies design and implementation could be crucial in improving aid effectiveness to achieve the Millennium Development Goals.