FISCAID, Fiscal behaviour, aid and decentralization

The project  

The FISCAID project, coordinated by Nathalie Ferrière (AMSE, Sciences Po Aix), aims to provide new empirical perspectives on the ability of aid to fulfil its main role in an evolving context. FISCAID proposes to use Uganda as a case study to explore the various mechanisms through which foreign aid influences the fiscal behaviour of the recipient country, focusing on public expenditure and domestic revenue at national and subnational levels. This will provide information to academics and policymakers on how to implement effective external financing while avoiding the Samaritan's dilemma. Administrative data from the Ugandan Ministry of Finance, Planning and Economic Development (MoFPED), already collected, will be mobilized for econometric analyses aimed at:
  1. determining to what extent aid is fungible and its impact on the fiscal behavior of recipient governments in the context of aid fragmentation and decentralization;
  2. examining whether these fiscal effects influence aid effectiveness and, more broadly, development. 
The project includes two components:
  • a study on the impact of aid on public finances
  • an analysis of aid effectiveness.

The team

The project led by AMSE mobilizes a team of international researchers: Marin Ferry (Gustave Eiffel University), Antoine Boucher (University of Göttingen), Emilie Caldeira (Université Clermont Auvergne, CERDI, FERDI), John Bosco Onyema and Edward Bbaale (Makerere University), and Lisa Chauvet (Panthéon Sorbonne University, CES, FERDI). 

Emilie Caldeira contributes to the first part of the study, which focuses on the impact of aid on public finances. An expert in decentralization policies and public finances in developing countries, she has produced numerous research papers on this topic. Furthermore, she accompanies and advises states in implementing their fiscal policy.

The method

Impact of aid on public finances 

Work package 1 aims to provide a comprehensive analysis of the impact of foreign aid on public finances. The team will build a database on the Ugandese national and local public finances and document the unpredictability of budget support. They will examine the impact of foreign aid on public expenditure and revenue to assess the presence of the Samaritan's dilemma. Finally, they will explore fiscal competition between local governments in the context of foreign aid flows.

Impact of aid on health 

The second work package aims to revisit the literature on aid effectiveness by examining the effects of aid on health outcomes in the presence of aid fungibility and analyzing the comparative effectiveness of aid and locally funded expenditures on growth at the subnational level. It will rely on data from the Demographic and Health Survey (DHS) and the World Bank's LSMS-ISA.

The partners 

This project has received support from the French National Research Agency (ANR)

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Photo : Kampala Uganda, Eric Okuru, Pexels.