New EU Discussion Paper: “Budget Support and MDG Performance”

EU website. This study, which is the first issue of the new EU “Development Papers” Series, analyses the relationship between the provision of general budget support (GBS) and MDG performance, by disaggregating countries into “high” and “low” budget support recipients and assessing the extent to which selected MDGs have improved in each of these groups.

We find that high GBS recipients have performed better, often significantly so, in all four MDGs assessed (covering primary enrolment, gender parity in education, child mortality, and access to water), as well as in terms of improvements in the Human Development Index, in the period 2002-2007. Correlation analysis also suggests that there is a positive relationship between budget support receipts and MDG performance (significant in the case of both education indicators and the HDI), but it is not always strong and other factors will also be important determinants of MDG performance. We also find that even after we control for the quality of the policy environment, income level and aid dependency, high GBS recipients have on average still performed better than other countries.

It should be emphasised that this study is an analysis of association, not causality. Nevertheless, the results overall do provide more comprehensive support for the view that countries receiving large amounts of budget support perform better than those receiving little or no budget support. Click here to access the study.

Background

“Development Papers” are informal discussion papers written by staff of the Directorate General for Development and Relations with African, Caribbean and Pacific States (DG DEV) or by experts working in association with them. The series intends to increase awareness of the EU policy thinking on development issues and to seek comments and suggestions for further analyses. Views expressed represent exclusively the positions of the authors and do not necessarily correspond to those of the European Commission.

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