A cross-country analysis of the relationships between aid fragmentation, government quality, and education outcomes

• In Event: Poster Group 2
  In Poster Session: A cross-country analysis of the relationships between aid fragmentation, government quality, and education outcomes

Proposal

Recent studies that have examined the impact of aid fragmentation present evidence that fragmentation of aid can negatively impact the quality of recipient governments’ administrative and bureaucratic capabilities (see, e.g., Burnside & Dollar, 2000; Knack & Rahman, 2004, 2007), and in turn undermine the overall effectiveness of aid (Djankov et al., 2009; Michaelowa & Weber, 2007). Additionally, research on the effect of aid on outcomes specific to the education sector are parsimonious. Within this context, this paper questions the relationships between aid fragmentation, government quality, and education outcomes to provide a more granular understanding of the implications of aid fragmentation in the education sector, operationalized as the following research questions:
1. To what degree does recipient-level fragmentation of education bilateral official development assistance (ODA) affect education outcomes?
2. To what extent is the relationship between aid fragmentation and education outcomes heterogeneous across countries with different levels of government quality?
We make use of three internationally comparable datasets: OECD Creditor Reporting System (CRS), World Bank World Development Indicators, and World Bank World Governance Indicators (WGI). For this study, we consider the education sector ODA disbursements made by 25 donor countries from 2002 to 2020 to 112 recipient countries.
We use a year-fixed effect panel regression model with the dependent variable being the annual primary education enrolment rates of recipient countries. The main independent variable of interest is the interaction of aid fragmentation and the total share of education ODA within a recipient country’s annual education sector budget. To this end, two complementary measures of education sector aid fragmentation are used: a (1) modified Herfindahl-Hirschman index (FHI), and (2) concentration ratios (CR1) (Ghering et al., 2017).
We find that in the baseline model where countries weren’t divided into subgroups based on their government quality, regression based on the interaction of fragmentation measured by FHI did not provide any significant relationship between fragmentation and primary education enrolment rates. However, the interaction term of the absence of a lead donor and the share of bilateral education ODA in the country’s total education budget was significant and positive, predicting a 6.1% increase in the following year’s enrolment rate. This result indicates that overall, the effectiveness of education ODA is conditional on the degree to which a country’s education budget is dominated by a large donor—that is, less dominance of a single donor contributes to the effectiveness of education ODA. However, such findings cannot be generalized since subgroup analyses based on the levels of political stability revealed that the interaction of education ODA and fragmentation are only significant for countries at the third quartile of political stability. This suggests the possibility of differential effects of aid fragmentation to countries with different political contexts. Further analysis will be conducted using additional subgroup analyses based on different aspects of government quality such as bureaucratic effectiveness, control of corruption, and voice and accountability of government.

Authors

• Sungkyum Kim, FLORIDA STATE UNIVERSITY

• Seol Lim, FLORIDA STATE UNIVERSITY