Why do governments in developing economies invest in roads and not enough in schools? In the presence of distortionary taxation and debt aversion, the different pace at which roads and schools contribute to economic growth turns out to be central to this decision. Specifically, while costs are...

Financing and the role of aid within the water sector are poorly understood. We estimate the levels of spending achieved in developing countries during the Millennium Development Goals period to be US$80 billion per year. Aid represented a substantial proportion of total sector financing in...