Does Conditionality Mitigate the Potential Negative Effect of Aid on Revenues?

Abstract

This paper assesses whether conditionality in IMF-supported programmes has helped offset the potential negative effect of foreign aid on tax revenues. The analysis – carried out on panel data covering 1993-2012 for 111 low- and middle-income countries – shows that growing use of revenue conditionality by low-income countries partially offsets the depressing effect of foreign grants on tax revenue, particularly on taxes on goods and services. The impact of conditionality is strong in countries where aid dependence is high and where institutions are strong, suggesting that revenue conditionality cannot substitute for weak institutions in mitigating any negative effect of aid on tax revenue collection.     

Does the Heterogeneity of Project Implementers Affect the Programme Participation of Beneficiaries?: Evidence from Rural Cambodia

This study employs the dataset collected for the assessment of a post-harvest technology project in rural Cambodia and focuses on the heterogeneous preferences of project implementers, frequently overlooked in the literature on programme evaluation studies. We focus on the ‘implementer effect’ on the programme participation of the treated farmers. We demonstrate that the heterogeneous programme participation of ordinary farmers could be induced due to heterogeneity in the characteristics of the project staff. In particular, we indicate that the baseline altruism of the project staff, measured by the dictator game, consistently increases the participation rate and the number of participations in the training sessions of beneficiaries. This type of heterogeneity in project staffs’ preferences across treatment sites could be a source of treatment heterogeneity for programmes conducted at a certain cluster level. While few studies have focused on the heterogeneity of programme implementers, our empirical results indicate that the preference of implementers could be a source of treatment heterogeneity and imply the importance of implementation of an actual project.     

How Does Contract Design Affect the Uptake of Microcredit among the Ultra-poor? Experimental Evidence from the River Islands of Northern Bangladesh

This study examines the demand of microcredit among ultra-poor households in northern Bangladesh. We implemented a field experiment to identify what type of credit is best suited to their demand. We found that the uptake rate by the ultra-poor is the lowest for regular small cash credit, followed by in-kind credit. We also found that the ultra-poor are significantly more likely to join a microcredit programme than the moderately poor if a grace period with longer maturity is attached to a large amount of credit, irrespective of whether the credit is provided in cash or in kind.     

Does Observance of Religious Holidays Affect Agricultural Productivity and Household Welfare? Evidence from Rural Ethiopia

This study examines whether traditional customs affect household's welfare by taking the case of the work prohibition related with religion in rural Ethiopia. Although the anecdotal evidence suggests that work prohibition by the Ethiopian Orthodox Church, to observe the religious holidays, is one of the reasons for the high poverty incidence in Ethiopia, the estimation results do not show that there is a significant effect of the number of religious holidays observed on agricultural productivity and household welfare. Observance of religious holidays affects crop choice and income source.     

Is Local Development Good Politics? Local Development Expenditures and the Re-Election of Governors in the Philippines in the 1990s

Abstract

Are incumbent governors who put more weight on development spending likely to be re-elected? To answer this question, an economic model of a re-electionist local chief executive is introduced and validated with a panel data of provincial governors who ran for another term of office during the election years 1992, 1995 and 1998 in the Philippines. It is found that incumbent governors improve their re-election chances with higher spending on economic development services, other things being constant. Moreover, governors who are members of political clans also have higher development spending especially when faced with rival clans. Thus, elections are still an effective disciplining device, more especially when rivalry is intense among political clans. The policy implication then is to enhance political competition rather than just ban political dynasties to improve the performance of elected officials under decentralization.     

Associations in the Embrace of an Authoritarian State: State Domination of Society?

According to conventional wisdom, associations that are closely linked with and penetrated by an authoritarian state are significant chiefly as symbols of state domination of society. Yet a review of empirical evidence suggests that the nature and significance of incorporated or co-opted associations varies much more widely than the conventional perspective suggests. Not only are close association-state linkages sometimes looked upon favorably by societal participants, but some independent societal associations actually seek to be co-opted by an authoritarian state. Moreover, incorporated associations often have more to do with strategies by state agencies and officials to accomplish parochial goals than with state efforts to control society. This article elucidates a new analytical perspective for understanding the dynamics and functioning of incorporated associations, citing a wide range of empirical cases to show how this perspective facilitates a better understanding of the kinds of state-society engagement that occur within and through incorporated associations. The article concludes with a brief analysis of associations in contemporary China that builds on the preceding discussion, illuminating the importance of local-level interactions in determining the character of incorporated associations. Kenneth W. Foster is a Ph.D. candidate in the department of political Science at the University of California, Berkeley. His research interests include state-society relations in developing countries, comparative public administration and organizational behavior, and the politics of China and Taiwan. His Ph.D. dissertation focuses on the relationship between bureaucratic processes and the emergence of associations in contemporary China.     

Peace at Daggers Drawn? Boko Haram and the State of Emergency in Nigeria

More than 3,500 people have died in Nigeria since 2009 when Boko Haram, a radical Islamist group from northeastern Nigeria, launched its violent campaign to wrest power from the Nigerian government and foist an Islamic state under the supreme law of Sharia. Attempts at negotiating with the group, including the recent amnesty offer extended to its members by the Nigerian government, have stalled due to distrust on both sides and the factionalized leadership of the group's different cells. This article provides a systematic account of Boko Haram's emergence, demands, and modus operandi. It also evaluates how the Nigerian government has responded to the group's threat and how they should respond. The socioeconomic approach of this article helps to explain the Boko Haram problem beyond a usual religious agenda and to evaluate the development of the group in the context of Nigeria's checkered political history and local economic grievances.     

Do Nasty and Pleasant Surprises Regarding Tax Revenue Explain Spending Drifts? The Case of the Swiss Cantons

This article aims to explain the difference between the expenditure reported in governmental end-of-the-year budgets and the amounts previously forecasted in the approved beginning-of-the-year budgets. We measure how political, financial, and institutional variables affect this spending drift. We focus on two much-debated factors, namely, tax revenue budgeting errors and the stringency of fiscal rules. Our econometric approach uses a panel based on the 26 Swiss cantons covering the period of 1980 to 2011. Results suggest that stringent fiscal rules discourage budget overruns, whereas underestimating tax revenue—i.e., a budgetary “pleasant surprise”—offers the opportunity for some overspending.     

Out with the Old and … In with the Old? A Critical Review of the Financial War on Terrorism on the Islamic State of Iraq and Levant

ABSTRACT

The aim of this article is to critically consider the effectiveness of the “Financial War on Terrorism” on the funding streams of the Islamic State of Iraq and Levant (ISIL). The article begins by identifying that the origins of the “Financial War on Terrorism” can be found in the international efforts to tackle money laundering. It then moves on to consider if the “Financial War on Terrorism” is able to tackle the funding streams of ISIL. The article concludes that the “Financial War on Terrorism” is no longer fit for the purpose to tackle the funding streams of ISIL.     

Sales Tax Competition among State–Local Governments: Evidence from the US Counties

This article estimates tax reaction function of local governments competing with other governments to provide the insight for tax policy decision makers. Employing a panel of county-level data in all the states from 1970 to 2006, this article analyzes sales tax competition between county governments. In addition to a static model, this article pays more attention to dynamics in tax reaction function estimated by general methods of moments containing lagged dependent variables in the reaction function. Focusing on county governments, this article finds evidence for strategic interaction, an interaction that has positive effects on the setting of tax rates in a county.     

The Rise of Militant Islam and the Security State in the Era of the ‘Long War’

This paper distinguishes between political and militant Islam and analyses the latter's current ability to confront empire and to become a social force in Muslim-majority states. This analysis is within the dialectic of collaboration and resistance, starting with client postcolonial states' pivotal role in bringing to fruition the collaboration between political Islam and US imperialism during the cold war era. The post-cold war period signals the imperialist putsch to confront militant Islam in the ‘Long War’ by employing the cold war strategy of ‘permanent war’ and universalising the idea of the security state. Militant Islam's resistance to the Long War and the security state makes this two-pronged imperial strategy a losing proposition for the USA. Paradoxically this strategy has also become the prime mover for militant Islam's ascendancy. The paper addresses the paradox of the USA's continuation with its losing Long War strategy and securitisation agenda which, although providing succour to militant Islam, is also achieving its larger objectives to buttress capitalist globalism; fuel the military–industrial and security–industrial complexes; and support ‘big oil’.     

Acknowledgement of the Secret Protocol of the German–Soviet Non-aggression Pact and the Declaration of State Sovereignty by the Union Republics of the USSR

In June 1989, the First Congress of People's Deputies of the Soviet Union established the Commission for Historical and Legal Estimation of the Soviet–German Non-aggression Pact of 1939. In the commission, representatives from Estonia, Latvia and Lithuania condemned the Soviet annexation of the Baltic States, prompting heated arguments regarding the invalidity of the related secret protocol of the pact with other members who continued to hold the traditional Soviet ideological view of the pact as something positive. The debate over the secret protocol had the further potential to extend to disputes over ‘recovery of lost territory’ amongst the Baltic States, Ukraine, Moldova, Belarus and Russia. This article analyses the arguments used by commission members, considering the interplay of national interests, how they balanced arguments between restoration of ‘state sovereignty’ and maintenance of borders, and how they finally compromised and concluded the commission's report.     

Tax Innovation or Excise Duty in Disguise? Deviations and Distortions in Value-Added Tax in Bangladesh

The article examines and analyzes the nature of deviations and distortions in the VAT system in Bangladesh. The article argues that the Bangladesh VAT introduced in 1991—with a view to maximize tax revenue by broadening tax base and curbing tax evasion while simplifying the process—has deviated significantly from standard and international best practices. It further argues that most of the deviations have their roots in the excise system of taxation that VAT has replaced and, while some of them produce ad hoc benefits in terms of generating revenue and easing compliance, most of them, besides eroding the coherence of the tax system, defeat the core principle of VAT—self assessment. The article concludes that if the process of adulterating VAT with so many ingenious adaptations and deviations is allowed to continue, the objective of VAT to evolve as an efficient tool for maximizing revenue will remain elusive.     

Beyond the Pale? Exploring Prospects for Negotiations with Al Qaeda and the Islamic State

ABSTRACT

This article argues that prospects for negotiations with Al Qaeda and the Islamic State have been undertheorized. Drawing on nearly two thousand pages of primary source material— all issues of Inspire and Dabiq magazines published at the time of writing—it examines these groups' statements about their motivations for violence, their objectives, and their views about the possibility of dialogue with the West. It finds stark differences in all three areas and suggests that assumptions that have prevented theorizing about negotiations with these groups should be revisited.     

Wasted Words? The Limitations of U.S. Strategic Communication and Public Diplomacy

For America's foes in Afghanistan and the Middle East, triumph on the battlefield is less important than winning the battle of perceptions. In response, the United States has turned to Strategic Communication and Public Diplomacy (SC-PD) to engage key audiences in ways that advance U.S. interests and to win the political-ideological contest for domestic and international legitimacy. But are these strategies effective? While winning hearts and minds is politically important, SC-PD—even at its best—is much less effective than other well-crafted and mutually supportive policies and strategies. Moreover, there are structural obstacles that greatly limit the effectiveness of SC-PD.     

Globalisation and Developing Countries – a Shrinking Tax Base?

This paper evaluates the impact of globalisation on tax bases of countries at varying stages of development. We see globalisation as a process that induces countries to embrace greater trade and financial integration. This in turn should shift their tax revenue from ‘easy to collect’ taxes (tariffs and seigniorage) towards ‘hard to collect’ taxes (value added and income taxes). We find that trade and financial openness have a positive association with the ‘hard to collect’ taxes, and a negative association with the easy to collect taxes.     

Does Livestock Ownership Affect Animal Source Foods Consumption and Child Nutritional Status? Evidence from Rural Uganda

Abstract

In many developing countries consumption of animal source foods (ASF) among the poor is still at a level where increasing its share in total caloric intake may have many positive nutritional benefits. This paper explores whether ownership of different livestock species increases consumption of ASF and helps improving child nutritional status, finding some evidence that both food consumption patterns and nutritional outcomes may be affected by livestock ownership in rural Uganda. Our results are suggestive that promoting (small) livestock ownership has the potential for affecting human nutrition in rural Uganda, but further research is needed to more precisely estimate the direction and size of these effects.