What happens to aid fungibility when the recipient government takes control? Effects of aid ownership in Rwanda

Motivation Aid fungibility and aid ownership have largely been discussed separately in the development literature. This is unfortunate because donors often aimed to reduce former increase latter, without fully understanding relationship between them. Purpose We analyse what happens when recipient government takes of its process by examining case Rwanda. Methods approach use a mixed-methods for our analysis. start with an econometric model determine if present To complement explore quantitative insights, we interviewed key informants used principal–agent framework help interpret findings. Findings find that fungible, albeit U-shaped relationship. Initially assistance causes expenditure fall, but subsequent increases cause as well. conclude took over through: (1) stimulating donor align their spending priorities; (2) urging switch from project budget support. Policy implications While taking should concerns about fungibility, it could also contribute marginalization certain sectors or themes this not inclusive.