The economics and politics of foreign aid and domestic revenue

Abstract

The main argument of this paper is that there is considerable heterogeneity in the way aid can shape tax performance in developing countries: through behavioural effects, donor conditionality, recipient policy reform and technical assistance; and these effects are countryspecific. We investigate these effects by applying the dynamic Common Correlated Effects Mean Group estimator to a dataset comprising 84 developing countries from 1980 to 2013. The following results ensued: aid and taxes comprise an equilibrium relation, with a positive long-run association between aid and taxes; causality runs from aid to taxes, suggesting that on average, changes in aid induce permanent changes in taxes.

Monetary Policy and Governance, Commodity Price Volatility and Tax Revenues in Sub-Saharan Africa

“…The lags and the square of the total population, urban population, and ethnic and cultural diversity index are used as instruments of governance. These instruments are chosen regarding the empirical literature (Diakite, et al 2019;Mbatia and Ellyne 2017;Tagem 2017).…”

Tax revenue effort and aid in fragile states: The case of Comoros

“…First, aid can influence tax revenue: A negative relationship plausible when aid (especially grants) is viewed by recipient countries as a politically cheaper source of revenue crowds out domestic taxation; and a positive relationship plausible when aid strengthens revenue administration or supports tax policy reform through technical assistance, projects and budget support. Recent cross‐country and country‐specific research on the impact of aid on taxation provides insights to show how donors can support increasing tax revenue rather than allowing aid to substitute for domestic effort (Bwire et al, 2017; Clist, 2016; Clist & Morrissey, 2011; Mascagni & Timmis, 2017; Tagem, 2017). This is through behavioural effects, gauged by the political costs of aid and tax that offset each other (Morrissey, 2015b; Morrissey & Torrance, 2015; Tagem, 2017); the positive impact of transfers of ideas and practices through technical assistance and projects for capacity building (Goldsmith, 2001; Tagem, 2017); and the stability of donor–recipient relations that manifests itself in the stability of foreign aid flows (Tagem, 2017).…”

“…Recent cross‐country and country‐specific research on the impact of aid on taxation provides insights to show how donors can support increasing tax revenue rather than allowing aid to substitute for domestic effort (Bwire et al, 2017; Clist, 2016; Clist & Morrissey, 2011; Mascagni & Timmis, 2017; Tagem, 2017). This is through behavioural effects, gauged by the political costs of aid and tax that offset each other (Morrissey, 2015b; Morrissey & Torrance, 2015; Tagem, 2017); the positive impact of transfers of ideas and practices through technical assistance and projects for capacity building (Goldsmith, 2001; Tagem, 2017); and the stability of donor–recipient relations that manifests itself in the stability of foreign aid flows (Tagem, 2017).…”

“…through technical assistance and projects for capacity building (Goldsmith, 2001;Tagem, 2017); and the stability of donor-recipient relations that manifests itself in the stability of foreign aid flows (Tagem, 2017). 18 Second, aid should have a direct financing impact on the level and composition of government spending (Morrissey, 2015a).…”

II. Ürün Mısır Çeşitlerinde Organik ve İnorganik Gübre Uygulamasının Verim ve Kaliteye Etkisi ile Ekonomik Analizi

“…Ülkemiz de gübre kullanımı her gecen yıl artmakla beraber yanlış gübre kullanımı sonucu ortaya çevre sorunları çıkmaktadır. Ülkemizde 2017 yılı gübre kullanım verilerine göre NPK gübreleri içerisinde %67 ile en fazla azot (N) tüketildiği görülmektedir (TAGEM, 2020). Tahıllar içerisinde en fazla ekim alanına sahip olmasından dolayı buğdayın azotlu gübre tüketimi fazladır.…”