The Philippines’ Absorptive Capacity for Foreign Aid

Hyewon Kang
JEL codes: 
PIDS Discussion Paper Series

This study evaluates the Philippines absorptive performance for foreign aid, particularly during the six-year period 2003 to 2008, and compare this to that of the previous period, 1986 to 1988.We observe that the countrys capacity to absorb foreign aid has declined during the period under study compared to that of the previous period.The study traces the causes of the reduction in aid absorptive capacity to several factors — both from the side of the recipient and donor country behavior — which negatively affected the aid absorptive capacity. The study discusses in detail these bottlenecks to aid absorption and provides policy recommendations to improve the countrys capacity for foreign aid absorption.