coverage ratio of the data enables the analysis of disbursement data only from 2002 onwards. To ensure consistency with the previous section, however, data for 2001 is included on the commitment basis. This also enables the analysis of the entire period following the official end of the conflict after the Arusha peace agreement in 2000.

Detailed data is available on commitments and gross disbursement by sector, purpose code, type of aid, donor etc.<sup>15</sup> Gross disbursements by sector as share of total disbursements using the OECD classification are given in Table 6. Absolute values for commitments, gross disbursements and the disbursement ratio by sector are provided in Table A-5 in the appendix.

**Table 6:** Gross disbursement by sector (share of total disbursement, OECD classification), 2001-2007

||2001*|2002|2003|2004|2005|2006|2007|average|
|---|---|---|---|---|---|---|---|---|
|Social Infrastructure and Services|49.6|35.3|31.5|23.1|29.3|31.3|30.8|33.0|
|Economic Infrastructure|0.1|0.6|0.0|0.1|1.0|2.1|5.0|1.3|
|Production Sectors|6.5|0.7|0.8|0.7|0.7|1.1|11.8|3.2|
|Multisector|1.1|5.1|1.9|3.7|2.3|3.9|6.1|3.4|
|Commodity Aid / General Prog. Assistance|1.9|15.4|6.1|4.8|15.9|16.0|17.6|11.1|
|Action Relating to Debt|3.1|3.1|2.1|30.3|4.0|5.2|1.0|7.0|
|Humanitarian Aid|33.0|31.5|45.2|32.0|43.1|39.0|27.0|35.8|
|Other|4.7|8.2|12.4|5.4|3.7|1.5|0.7|5.2|
|Total|100.0|100.0|100.0|100.0|100.0|100.0|100.0|100.0|

_Source_ : Authors’ calculation based on OECD – DAC data; *2001: commitments, no data on disbursements available.

On average, the highest amount has been allocated to humanitarian aid, followed by social infrastructure and services and commodity aid/general program assistance.<sup>16</sup> The share of humanitarian aid is decreasing slowly since 2005. The amount dedicated to production sectors is very small and the large amount of funding in 2007can be attributed to trade related adjustments and not to spending on production oriented sectors, such as agriculture or mining.<sup>17</sup> In 2004, almost a third of the disbursed aid was related to debt relief/debt rescheduling by the European Commission and France.

This classification of the OECD can, however, be misleading as it assumes that all aid has the same impact on growth. In the following, we break down the allocation of aid according to its impact on growth.

# 4.3. <u>Impact of aid on growth in Burundi</u>

As discussed in section 4.1, the effect of aid on the economic development has to be examined (i) in the country-specific context, and (ii) according to the aid category. Regarding the categorization of aid and the effect on economic growth, we follow the approach of Clemens et al. (2004), modified to capture Burundi specific characteristics. Aid is classified in three aggregate categories that combine sectors according their lag in impacting growth.

This approach is possible by using the CRS database, providing a breakdown of aid disbursement by 194 purpose codes. Each purpose code has been assigned a category that relates to its impact on aid. The categories are (i) emergency and humanitarian aid, (ii) aid with a short-term impact

> 15 The CRS also provides aid commitments and disbursements by type of aid, i.e. investment project, sector programme, technical cooperation or a combination of the three, but unfortunately for Burundi, the data is not very conclusive. On average, the type of 75 percent of disbursed aid was classified as ‘other’, making a meaningful interpretation impossible.

> 16 The sub-categories as well as the respective individual amounts are given in Table A-5 in the appendix.

> 17 Funding for trade related adjustments has been provided via STABEX ( _Système de Stabilisation des Recettes d'Exportation_ ), a compensatory financing scheme of the European Commission to stabilize export earnings. In 2007, Burundi received a total of USD 39.96 million to compensate for lower export earnings from coffee and hides and skins in the years 1993 to 1999 retrospectively.

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