Tax havens have attracted increasing attention from policy-makers in recent years. This paper provides an overview of a growing body of research that analyses the consequences and determinants of the existence of tax-haven countries. For instance, recent evidence suggests that tax havens tend to have stronger governance institutions than comparable non-haven countries. Most importantly, tax havens provide opportunities for tax planning by multinational corporations. It is often argued that tax havens erode the tax base of high-tax countries by attracting such corporate activity. However, while tax havens host a disproportionate fraction of the world's foreign direct investment (FDI), their existence need not make high-tax countries worse off. It is possible that, under certain conditions, the existence of tax havens can enhance efficiency and even mitigate tax competition. Indeed, corporate tax revenues in major capital-exporting countries have exhibited robust growth, despite substantial FDI flows to tax havens. Copyright 2008, Oxford University Press.
{"title":"What Problems and Opportunities are Created by Tax Havens?","authors":"Dhammika Dharmapala","doi":"10.2139/ssrn.1279146","DOIUrl":"https://doi.org/10.2139/ssrn.1279146","url":null,"abstract":"Tax havens have attracted increasing attention from policy-makers in recent years. This paper provides an overview of a growing body of research that analyses the consequences and determinants of the existence of tax-haven countries. For instance, recent evidence suggests that tax havens tend to have stronger governance institutions than comparable non-haven countries. Most importantly, tax havens provide opportunities for tax planning by multinational corporations. It is often argued that tax havens erode the tax base of high-tax countries by attracting such corporate activity. However, while tax havens host a disproportionate fraction of the world's foreign direct investment (FDI), their existence need not make high-tax countries worse off. It is possible that, under certain conditions, the existence of tax havens can enhance efficiency and even mitigate tax competition. Indeed, corporate tax revenues in major capital-exporting countries have exhibited robust growth, despite substantial FDI flows to tax havens. Copyright 2008, Oxford University Press.","PeriodicalId":247622,"journal":{"name":"ERN: Fiscal & Monetary Policy in Developing Economies (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2008-10-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134158134","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2008-09-25DOI: 10.1111/j.1540-5850.2008.00914.x
Roy W. Bahl, R. Bird
It is critical to emphasize that intergovernmental fiscal relations must be thought of as a system and that all the pieces in the system must fit together if decentralization is to work properly. Various theories and experiences strongly suggest that if fiscal decentralization is to produce sustainable benefits in developing countries, then subnational governments require subnational taxes than the present system. Moreover, in developing countries there are potentially sound and productive taxes that subnational governments could use. This paper reviews the literature and evidence on the most appropriate structure of regional and local taxes in developing countries. [IIB WP no.16]
{"title":"Subnational Taxes in Developing Countries: The Way Forward","authors":"Roy W. Bahl, R. Bird","doi":"10.1111/j.1540-5850.2008.00914.x","DOIUrl":"https://doi.org/10.1111/j.1540-5850.2008.00914.x","url":null,"abstract":"It is critical to emphasize that intergovernmental fiscal relations must be thought of as a system and that all the pieces in the system must fit together if decentralization is to work properly. Various theories and experiences strongly suggest that if fiscal decentralization is to produce sustainable benefits in developing countries, then subnational governments require subnational taxes than the present system. Moreover, in developing countries there are potentially sound and productive taxes that subnational governments could use. This paper reviews the literature and evidence on the most appropriate structure of regional and local taxes in developing countries. [IIB WP no.16]","PeriodicalId":247622,"journal":{"name":"ERN: Fiscal & Monetary Policy in Developing Economies (Topic)","volume":"12 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2008-09-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127911961","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The Chinese banking system has improved significantly over the past decade, but in one critical respect, it appears to have regressed. The People's Bank of China controls interest rates in a way that has led to significant financial repression--low and now negative real return on deposits--as inflation has risen in recent years. This distorted interest rate structure is a significant obstacle to further reform of the financial system and to sustaining China's rapid economic growth. Financial repression costs Chinese households about 255 billion renminbi (US$36 billion), 4.1 percent of China's GDP, and a fifth of it goes to corporations, one-quarter to banks, and the government assumes the rest. Financial repression reduces the cost to the government of sterilized intervention to sustain China's undervalued exchange rate relative to the cost it would face if interest rates were liberalized. But the financial repression that facilitates an undervalued exchange rate imposes substantial, if partially hidden, costs on China's economy. It has led to lending rates that are far too low, resulting in excess demand for bank loans and increased use of quantitative targets to control credit growth. These have led to a less efficient allocation of capital through the banking system and to a huge underground financial market. Financial repression is also contrary to the government's long-term goal of developing a commercial banking system. It has also depressed the growth of household income, undermining the government's goal of transitioning to a growth path that relies less on investment and net exports and more on domestic consumption. Finally, financial repression seriously hinders the development of a fully and efficiently functioning capital market.
{"title":"Financial Repression in China","authors":"N. Lardy","doi":"10.2139/ssrn.2126174","DOIUrl":"https://doi.org/10.2139/ssrn.2126174","url":null,"abstract":"The Chinese banking system has improved significantly over the past decade, but in one critical respect, it appears to have regressed. The People's Bank of China controls interest rates in a way that has led to significant financial repression--low and now negative real return on deposits--as inflation has risen in recent years. This distorted interest rate structure is a significant obstacle to further reform of the financial system and to sustaining China's rapid economic growth. Financial repression costs Chinese households about 255 billion renminbi (US$36 billion), 4.1 percent of China's GDP, and a fifth of it goes to corporations, one-quarter to banks, and the government assumes the rest. Financial repression reduces the cost to the government of sterilized intervention to sustain China's undervalued exchange rate relative to the cost it would face if interest rates were liberalized. But the financial repression that facilitates an undervalued exchange rate imposes substantial, if partially hidden, costs on China's economy. It has led to lending rates that are far too low, resulting in excess demand for bank loans and increased use of quantitative targets to control credit growth. These have led to a less efficient allocation of capital through the banking system and to a huge underground financial market. Financial repression is also contrary to the government's long-term goal of developing a commercial banking system. It has also depressed the growth of household income, undermining the government's goal of transitioning to a growth path that relies less on investment and net exports and more on domestic consumption. Finally, financial repression seriously hinders the development of a fully and efficiently functioning capital market.","PeriodicalId":247622,"journal":{"name":"ERN: Fiscal & Monetary Policy in Developing Economies (Topic)","volume":"2006 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2008-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128683311","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper commences by examining the evolution of a programme designed to reach the poorest people in Bangladesh, to improve their immediate situation and to give them the assets and other skills to move out of poverty and dramatically reduce their vulnerability – BRAC's Challenging the Frontiers of Poverty Reduction/Targeting the Ultra Poor Programme, or CFPR-TUP. It then reviews what is known about the impacts of TUP, and finds evidence that the programme is both reaching significant numbers of Bangladesh’s poorest people and improving their economic and social condition. The concluding sections draw lessons from the TUP about the types of programme design features and the processes required in order to develop such ambitious initiatives.
{"title":"Assisting the Poorest in Bangladesh: Learning from BRAC's 'Targeting the Ultra Poor' Programme","authors":"D. Hulme, K. Moore","doi":"10.2139/ssrn.1160303","DOIUrl":"https://doi.org/10.2139/ssrn.1160303","url":null,"abstract":"This paper commences by examining the evolution of a programme designed to reach the poorest people in Bangladesh, to improve their immediate situation and to give them the assets and other skills to move out of poverty and dramatically reduce their vulnerability – BRAC's Challenging the Frontiers of Poverty Reduction/Targeting the Ultra Poor Programme, or CFPR-TUP. It then reviews what is known about the impacts of TUP, and finds evidence that the programme is both reaching significant numbers of Bangladesh’s poorest people and improving their economic and social condition. The concluding sections draw lessons from the TUP about the types of programme design features and the processes required in order to develop such ambitious initiatives.","PeriodicalId":247622,"journal":{"name":"ERN: Fiscal & Monetary Policy in Developing Economies (Topic)","volume":"2 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2008-07-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128941507","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
If social policies are to be effective, they need to be implemented. A key contributing factor to the success or failure of implementation is the way public sector funds are mobilized, allocated, and disbursed. This is widely recognized, as demonstrated by the wide range of studies analyzing public sector financing. Until relatively recently, attention was primarily focused on budgets and allocations while efforts were made to improve information systems and reporting. In the last decade, recognizing the poor quality of expenditure reporting, Public Expenditure Tracking Surveys (PETS) have been used to draw attention to whether funds are actually applied to their intended purposes. This study looks at a number of PETS studies that have been completed in the last decade and reviews the existing literature on these studies. It discusses how PETS have come to be defined, what makes them distinctive, and how they are used. The key purposes are to demonstrate how and why PETS are useful and suggest some ways to increase their usefulness.
{"title":"Public Expenditure Tracking Surveys: Planning, Implementation and Uses","authors":"W. Savedoff","doi":"10.2139/ssrn.1877184","DOIUrl":"https://doi.org/10.2139/ssrn.1877184","url":null,"abstract":"If social policies are to be effective, they need to be implemented. A key contributing factor to the success or failure of implementation is the way public sector funds are mobilized, allocated, and disbursed. This is widely recognized, as demonstrated by the wide range of studies analyzing public sector financing. Until relatively recently, attention was primarily focused on budgets and allocations while efforts were made to improve information systems and reporting. In the last decade, recognizing the poor quality of expenditure reporting, Public Expenditure Tracking Surveys (PETS) have been used to draw attention to whether funds are actually applied to their intended purposes. This study looks at a number of PETS studies that have been completed in the last decade and reviews the existing literature on these studies. It discusses how PETS have come to be defined, what makes them distinctive, and how they are used. The key purposes are to demonstrate how and why PETS are useful and suggest some ways to increase their usefulness.","PeriodicalId":247622,"journal":{"name":"ERN: Fiscal & Monetary Policy in Developing Economies (Topic)","volume":"18 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2008-06-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114468118","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper seeks to argue that even though globalization processes such as structural-adjustment programs may in one way or the other be beneficial to developing countries, they do not actually lead to the reduction of poverty in these countries. The first part of this paper deals with indept definitions held on the concept of globalization. The second part also discusses some of the arguments held by those who subscribe to concept of globalization and its impact on the poor in developing countries. Lastly this paper in the final part argues that globalization does not result in the reduction of poverty among the poor in developing countries as we are most of the time made to believe.
{"title":"Does Globalization Result in Poverty Reduction?","authors":"Kwaku Owusu Afriyie","doi":"10.2139/ssrn.1279400","DOIUrl":"https://doi.org/10.2139/ssrn.1279400","url":null,"abstract":"This paper seeks to argue that even though globalization processes such as structural-adjustment programs may in one way or the other be beneficial to developing countries, they do not actually lead to the reduction of poverty in these countries. The first part of this paper deals with indept definitions held on the concept of globalization. The second part also discusses some of the arguments held by those who subscribe to concept of globalization and its impact on the poor in developing countries. Lastly this paper in the final part argues that globalization does not result in the reduction of poverty among the poor in developing countries as we are most of the time made to believe.","PeriodicalId":247622,"journal":{"name":"ERN: Fiscal & Monetary Policy in Developing Economies (Topic)","volume":"26 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2008-05-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128108192","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper replicates DiMasi et al (2003, 2004) estimates of expenditure on new drug development using publicly available data. The paper estimates that average expenditure on drugs in human clinical trials is around $27m per year, with $17m per year on drugs in Phase I, $34m on drugs in Phase II and $27m per year on drugs in Phase III of the human clinical trials. The paper's estimated expenditure on new drug development is somewhat greater than suggested by the survey results presented in DiMasi et al (2003, 2004). The paper combines a twelve year panel of research and development expenditure for 183 publicly traded firms in the pharmaceutical industry with panel of drugs in human clinical trials for each firm over the same period. The paper estimates drug expenditure by estimating the relationship between research and development expenditure and the number of drugs in development for 1,682 company/years (183 firms multiplied by the number of years for which we have financial and drug development information). The paper also estimates expenditure on drugs in various therapeutic categories. The paper confirms earlier work by the authors that $802m may under estimate the average amount needed to bring a new molecular entity to market. It also confirms that there is significant variation in spending by therapeutic category.
{"title":"Spending on New Drug Development","authors":"C. Adams, Van V. Brantner","doi":"10.2139/ssrn.869765","DOIUrl":"https://doi.org/10.2139/ssrn.869765","url":null,"abstract":"This paper replicates DiMasi et al (2003, 2004) estimates of expenditure on new drug development using publicly available data. The paper estimates that average expenditure on drugs in human clinical trials is around $27m per year, with $17m per year on drugs in Phase I, $34m on drugs in Phase II and $27m per year on drugs in Phase III of the human clinical trials. The paper's estimated expenditure on new drug development is somewhat greater than suggested by the survey results presented in DiMasi et al (2003, 2004). The paper combines a twelve year panel of research and development expenditure for 183 publicly traded firms in the pharmaceutical industry with panel of drugs in human clinical trials for each firm over the same period. The paper estimates drug expenditure by estimating the relationship between research and development expenditure and the number of drugs in development for 1,682 company/years (183 firms multiplied by the number of years for which we have financial and drug development information). The paper also estimates expenditure on drugs in various therapeutic categories. The paper confirms earlier work by the authors that $802m may under estimate the average amount needed to bring a new molecular entity to market. It also confirms that there is significant variation in spending by therapeutic category.","PeriodicalId":247622,"journal":{"name":"ERN: Fiscal & Monetary Policy in Developing Economies (Topic)","volume":"10 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2008-03-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123987551","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Since the inception and execution of the New Economic Policy introduced by the Government of India in 1991, the Indian economy has seen significant changes both in the domestic and the foreign front. There have been macroeconomic stabilizations within the country as well as new directions in foreign trade. In the past 16 years the world has seen India transform from a developing economy to an emerging economy. Along with China, it is being referred to as an Asian superpower. The past performance of a robust service industry, specially in the field of IT and ITeS, judicious fiscal and monetary policies in the home front and above all, prudential foreign policies have catapulted India to the second position in the list of the fastest growing economies of the world. This is in turn, shifting the global economic centre of gravity towards India. But much dust has also been put under the carpet. The term which is mostly used for infrastructure in the country is dismal. This raises a major question - Will India's growth momentum come to a halt in the long run, infrastructure being the main culprit? The infrastructure (both physical and human) is the backbone of a country. Although it is necessary for India to meet global standards if it wants more of foreign investments, little has been done about it. Instead of raising funds in the domestic sector through the introduction of taxes, surcharges and cesses for the cause, our argument is: Why can't we utilize a part of the huge foreign reserves which we have amassed over the years? Studies show that the composition of our foreign reserves is quite comfortable. Even in times of dire necessities, we can still avoid situations like what the Asian Tigers have faced in late 1990s. The RBI's maintenance of its policy of safety, liquidity and returns (with respect to foreign reserves) will not be hampered if it lends a small portion to the real sector in the domestic economy. We can learn from the procedures followed by other Asian economies and modify them to meet our needs. Or we can formulate our own policies conducive to our environment. Infrastructure development will have both upstream and downstream effects and that is sure to wipe off that nagging question: Can India continue?
{"title":"Rising Foreign Exchange Reserves: A Potential Source for Infrastructural Development in India?","authors":"J. Saha, Tarumoy Chaudhuri","doi":"10.2139/SSRN.1266716","DOIUrl":"https://doi.org/10.2139/SSRN.1266716","url":null,"abstract":"Since the inception and execution of the New Economic Policy introduced by the Government of India in 1991, the Indian economy has seen significant changes both in the domestic and the foreign front. There have been macroeconomic stabilizations within the country as well as new directions in foreign trade. In the past 16 years the world has seen India transform from a developing economy to an emerging economy. Along with China, it is being referred to as an Asian superpower. The past performance of a robust service industry, specially in the field of IT and ITeS, judicious fiscal and monetary policies in the home front and above all, prudential foreign policies have catapulted India to the second position in the list of the fastest growing economies of the world. This is in turn, shifting the global economic centre of gravity towards India. But much dust has also been put under the carpet. The term which is mostly used for infrastructure in the country is dismal. This raises a major question - Will India's growth momentum come to a halt in the long run, infrastructure being the main culprit? The infrastructure (both physical and human) is the backbone of a country. Although it is necessary for India to meet global standards if it wants more of foreign investments, little has been done about it. Instead of raising funds in the domestic sector through the introduction of taxes, surcharges and cesses for the cause, our argument is: Why can't we utilize a part of the huge foreign reserves which we have amassed over the years? Studies show that the composition of our foreign reserves is quite comfortable. Even in times of dire necessities, we can still avoid situations like what the Asian Tigers have faced in late 1990s. The RBI's maintenance of its policy of safety, liquidity and returns (with respect to foreign reserves) will not be hampered if it lends a small portion to the real sector in the domestic economy. We can learn from the procedures followed by other Asian economies and modify them to meet our needs. Or we can formulate our own policies conducive to our environment. Infrastructure development will have both upstream and downstream effects and that is sure to wipe off that nagging question: Can India continue?","PeriodicalId":247622,"journal":{"name":"ERN: Fiscal & Monetary Policy in Developing Economies (Topic)","volume":"24 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2008-02-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121262107","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The swift increase in stand-alone property tax abatement programs (SAPTAPS) allowed within the United States (from 30 percent of the states allowing them in 1964 to 70 percent in 2004), the nationwide erosion in property tax base they likely generate, and the wide variety of arguments given both pro and con for the continued existence of these programs are the reasons their use is explored in this paper. The paper first offers evidence on the increasing use of property tax abatement in the United States, and the arguments previously put forth in favor and against the use of this form of economic development incentive. Next, the economic theory indicating why abatement may promote sub-national economic development is summarized. This is followed by a description of the types and prevalence of SAPTAPs currently in the United States, and a summary of the best empirical evidence that exists on the effects of property tax abatements. The conclusion offers my own recommendations in regard to how sub-national decision makers should view the offering of SAPTAPs and policy suggestions for the future of property tax abatement in the United States.
{"title":"The Increasing Use of Property Tax Abatement as a Means of Promoting Sub-National Economic Activity in the United States","authors":"Robert W. Wassmer","doi":"10.2139/SSRN.1088482","DOIUrl":"https://doi.org/10.2139/SSRN.1088482","url":null,"abstract":"The swift increase in stand-alone property tax abatement programs (SAPTAPS) allowed within the United States (from 30 percent of the states allowing them in 1964 to 70 percent in 2004), the nationwide erosion in property tax base they likely generate, and the wide variety of arguments given both pro and con for the continued existence of these programs are the reasons their use is explored in this paper. The paper first offers evidence on the increasing use of property tax abatement in the United States, and the arguments previously put forth in favor and against the use of this form of economic development incentive. Next, the economic theory indicating why abatement may promote sub-national economic development is summarized. This is followed by a description of the types and prevalence of SAPTAPs currently in the United States, and a summary of the best empirical evidence that exists on the effects of property tax abatements. The conclusion offers my own recommendations in regard to how sub-national decision makers should view the offering of SAPTAPs and policy suggestions for the future of property tax abatement in the United States.","PeriodicalId":247622,"journal":{"name":"ERN: Fiscal & Monetary Policy in Developing Economies (Topic)","volume":"49 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2007-12-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115677513","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Many developing country governments rely heavily on trade tax revenue. Therefore, trade liberalization can be a potential source of significant fiscal instability, and may affect government spending on development activities. Donor nations may take this into account in making their aid allocation decisions for developing nations. Our findings suggest that bilateral donors provide substantially larger amounts of aid to compensate (or reward) liberalizing recipient nations who also face declining trade tax revenues. Interestingly, these effects are statistically insignificant in the context of multilateral aid. Multilateral donors are more focused on income per capita and may be using it as a de facto measure of average living standards in the recipient nations.
{"title":"Do Donors Care about Declining Trade Revenues from Liberalization? An Analysis of Aid Allocation","authors":"Javed Younas, S. Bandyopadhyay","doi":"10.2139/ssrn.1004297","DOIUrl":"https://doi.org/10.2139/ssrn.1004297","url":null,"abstract":"Many developing country governments rely heavily on trade tax revenue. Therefore, trade liberalization can be a potential source of significant fiscal instability, and may affect government spending on development activities. Donor nations may take this into account in making their aid allocation decisions for developing nations. Our findings suggest that bilateral donors provide substantially larger amounts of aid to compensate (or reward) liberalizing recipient nations who also face declining trade tax revenues. Interestingly, these effects are statistically insignificant in the context of multilateral aid. Multilateral donors are more focused on income per capita and may be using it as a de facto measure of average living standards in the recipient nations.","PeriodicalId":247622,"journal":{"name":"ERN: Fiscal & Monetary Policy in Developing Economies (Topic)","volume":"29 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2007-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132068094","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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