Import support has become an important form of aid - accounting for more than half of all aid from some donors to Tanzania and Zambia. However, there has been little analysis of import support in the aid effectiveness literature. This paper finds that import support aid is largely effective: (i) there is no evidence that the money is used for undesirable luxury imports; (ii) beneficial effects on capacity utilisation and output can be observed; (iii) it is a form of aid which manages to reach the private sector; and (iv) donors have adopted procedures to avoid potential adverse consequences of counterpart funds. The management of import support schemes is also discussed - market-based schemes being preferable to administrative ones, and market-oriented reforms being required for a well functioning import support system. The paper concludes by arguing that donors should not place controls on the use of aid for import support, but rather devote their resources to assisting in the successful implementation of government activities which are supported by the counterpart funds.
Series | ISS working papers. General series |
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Number | 177 |
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ISSN | 0921-0210 |
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- ISS Working Paper-General Series