Fiscal Reforms and the Fiscal Effects of Aid in Uganda

Abstract

Uganda implemented public expenditure and revenue management reforms from the early 1990s with specific aims of improving budget planning and aligning aid with fiscal priorities. The dynamic relationship between aid and domestic fiscal aggregates is analysed using a Cointegrated Vector Autoregressive model with annual data for 1972–2008 and quarterly data for 1997–2014. Aid has been a significant element of long-run fiscal equilibrium, associated with increased tax effort and public spending and reduced domestic borrowing. Fiscal reforms have improved aid and expenditure management, contributing to improved fiscal performance in Uganda, with lessons for other African countries.     

The Changing Development Landscape in the First Decade of the 21st Century and its Implications for Development Studies

Abstract

The first decade of the 21st century has been characterised by complex and interrelated changes that have affected development. Development studies as a discipline has traditionally been concerned with the impact of colonisation and neocolonialism, and with neoliberal-related growth models. This paper argues that, since around the turn of the century, there has been a major shift in development, driven by a series of fundamental changes, including the relative failure of the neoliberal project in the 1980s and 1990s, which by the 2000s was partly replaced by a greater concern with addressing security issues with aid; the rise of China and other middle-income countries as large resource providers for development; and the rapid increase of remittance flows to lower and middle income countries. The paper looks at how both development studies and aid policy in Australia and elsewhere have been relatively slow to engage with this rapidly changing context. The big challenges for development studies will be: engaging with developing countries as development donors with different agendas for development; the decline of much of the current neoliberal paradigm; alternative sources of development finance; and the securitisation of Western aid.     

Feature review Corruption eruption: Development and the international community

Abstract

‘Tied’ or ‘in-kind’ international food aid has been criticised as an implicit form of export subsidy that governments use to circumvent export subsidy restrictions. In addition to displacing agricultural exports, food aid is less efficient than untied aid and depresses local agricultural production in recipient countries. I argue that tied food aid is not protected by the Uruguay Round Agreement on Agriculture and could consequently be challenged under the World Trade Organization's dispute settlement mechanism as a prohibited or actionable subsidy contrary to the Subsidies and Countervailing Measures (scm) Agreement. As the USA is both the largest donor of international food aid and most consistently ties its food aid to domestic agricultural producers, this paper focuses on US policy to describe the challenge that might be advanced under the scm Agreement.     

The Political Economy of Bad Data: Evidence from African Survey and Administrative Statistics

Abstract

Across multiple African countries, discrepancies between administrative data and independent household surveys suggest official statistics systematically exaggerate development progress. We provide evidence for two distinct explanations of these discrepancies. First, governments misreport to foreign donors, as in the case of a results-based aid programme rewarding reported vaccination rates. Second, national governments are themselves misled by frontline service providers, as in the case of primary education, where official enrolment numbers diverged from survey estimates after funding shifted from user fees to per pupil government grants. Both syndromes highlight the need for incentive compatibility between data systems and funding rules.     

Incoherence between Tax and Development Policies: the case of the Netherlands

Abstract

This article discusses incoherence between tax and development policies, a relatively new area in the debate on policy coherence for development, using a case study of the Netherlands. Dutch business entities play a key role in tax avoidance structures of multinational corporations. We argue that the Dutch tax regime facilitates the avoidance of substantial amounts of tax revenues in developing countries when compared to the Dutch aid budget. As domestic tax revenues are an important source of financing for development, this suggests that the Dutch tax policy is incompatible with the Dutch policy on development co-operation. The lack of policy coherence is largely unintended but it has structural and political causes.     

Persuasion and Predation: The Effects of U.S. Military Aid and International Development Aid on Civilian Killings

ABSTRACT

Powerful states frequently employ foreign aid to pursue international security objectives. Yet aid's effectiveness will be undermined if it exacerbates the effects of conflict on civilians within recipient states. This article investigates how international development aid and U.S. military aid influence recipient governments' incentives and ability to target civilians. U.S. military aid has a persuasion effect on state actors, which decreases a recipient state's incentives and necessity to target civilians. Development aid flows, however, trigger a predation effect in some environments, exacerbating civilian targeting. An analysis of aid flows in 135 countries on civilian killings between 1989–2011 provides support for both the persuasion and predation effects associated with aid.     

Technological-Institutional Synergy and the Extent of National E-Governments

Synergy between technological infrastructure and institutional efficacy is hypothesized to be a key enabler of national e-governments and is empirically demonstrated using objective measures for these two factors. For the research models proposed, composite variables are constructed from secondary sources, data are analyzed using moderated multiple regression, and robustness is demonstrated with assorted post hoc analyses, including model validation via replication. Well over half the variance in e-government across countries is explained by the single TI synergy term using data reported in 2008 (n = 60, adjusted R² = 0.618) and in 2010 (n = 103, adjusted R² = 0.651; n = 120, adjusted R² = 0.694). This simple linear regression model offers a straightforward way to visualize the relative positions of countries with respect to technological-institutional synergy and the extent of national e-government. Using the model to identify atypical countries and country clusters for further study is highlighted.     

The Return to Foreign Aid

Abstract

We estimate the average rate of return on investments financed by aid and by domestic resource mobilisation, using aggregate data. Both returns are expected to vary across countries and time. Consequently we develop a correlated random coefficients model to estimate the average returns. Across different estimators and two different data sources for GDP and investment our findings are remarkably robust; the average gross return on ‘aid investments’ is about 20 per cent. This is in accord with micro estimates of the economic rate of return on aid projects and with aggregate estimates of the rate of return on public capital.     

The Role of Non -Economic Drivers in Development Planning: The Case of South Korea and Turkey

ABSTRACT

The relationships between economic growth and planning strategies have been debated in different disciplines of social science. However, the emphasis has been more on structural and theoretical assumptions of planning and economics at the expense of other important non-economic and institutional factors that include social, cultural, political, and administrative dimensions. To explain the different approaches and outcomes of development planning, one needs to examine other factors that influence the nature of these plans and why they have been adopted. Using rigorous systematic and thematic review of government reports, academic publications and data from international organizations, this comparative study reveal the unique role non-economic factors play in countries’ development. It has been revealed that these factors not only influence the nature of planning strategies adopted by governments but also affect how these plans are implemented. Since South Korea and Turkey have achieved impressive economic growth over the last half a century, they have been selected as a case study to examine the role non-economic factors in their respective developments.     

Aid and Performance: A Reassessment

Two visions of aid effectiveness and allocation are compared. The first, corresponding to the new aid paradigm, argues that aid is only effective if domestic policies are appropriate. The second, in contrast, argues that aid effectiveness depends on the external and climatic environment: the worse this environment, or the more vulnerable the recipient countries, the greater the effectiveness of aid. Cross-sectional econometric tests related to GDP growth on two 12-year pooled periods clearly favour the second view. The two views can be reconciled through the principle of performance-based aid allocation, where performance is defined as outcomes adjusted for the impact of environmental factors. Performance can then be measured in several manners which are subject to comparison. One approach would lead one to allocate more aid the worse the (external) environment is (for a given policy) and the better the policy is (for a given environment).     

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.     

Corruption,Privatisation and Economic Growth in Post-communist Countries

Abstract

This article empirically investigates the effects of corruption and privatisation on economic growth in the post-communist countries of Central and Eastern Europe and the former USSR. We use a corruption and privatisation augmented open-economy leader–follower endogenous growth model to derive our research hypotheses. In this setting, corruption, privatisation and external openness jointly determine the per capita income in the follower economy. This model predicts that economies with higher shares of private ownership, lower corruption, and higher external openness enjoy higher rates of growth. Our empirical verification of these predictions is based on a panel of 29 post-communist countries during the period 1996–2014. Our estimation results confirm the negative effects of corruption, while the positive effects of privatisation are limited to small-scale privatisation.     

Aid Absorption and Spending in Africa: A Panel Cointegration Approach

This article focuses on the macroeconomic management of large inflows of foreign aid. It investigates the extent to which African countries have coordinated fiscal and macroeconomic responses to aid surges. In practice, we construct a panel dataset to assess the level of aid ‘absorption’ and ‘spending’. This article departs from the recent empirical literature by utilising better measures for aid inflows and by employing cointegration analysis. The empirical short-run results indicate that, on average, Africa's low-income countries have absorbed two-thirds of (grant) aid receipts. This suggests that most of the foreign exchange provided by the aid inflows has been used to finance imports. The other third has been used to build up international reserves, perhaps to protect economies from future external shocks. In the long run, absorption increases but remains below its maximum. Moreover, we also show that aid resources have been fully spent, especially in support of public investment. There is only weak evidence that a share of aid flows have been ‘saved’. Overall, these findings suggest that the macroeconomic management of aid inflows in Africa has been significantly better than often portrayed in comparable exercises. The implication is that African countries will be able to efficiently manage a gradual scaling up in aid resources.     

The Income Lever and the Allocation of Aid

Abstract

The article develops a concept and a measure of the monetary capacity of a country to reduce its own poverty and shows how these tools can be used to guide budget allocations or the allocation of aid. The authors call this concept the income lever. Making use of tax and distributive theory, the article shows how different redistributive criteria correspond to the different normative criteria of the income lever. It then constructs various income lever indexes based on these criteria and uses such indexes to rank countries according to their own capacity to reduce poverty.     

Who Benefits from Aid for Trade? Comparing the Effects on Recipient versus Donor Exports

Abstract

Recent studies offer an ambiguous picture on the effectiveness of foreign aid in strengthening the export capacity of recipient countries. Moreover, the literature on aid for trade (AfT) has often neglected the fact that exporters in the donor countries may be among the main beneficiaries. We simultaneously estimate and compare the effects of AfT on trade in both directions. We find that AfT increases recipient exports to donors as well as recipient imports from donors. The first effect tends to dominate the latter, which contradicts the sceptical view that donors grant AfT primarily to promote their own export interests.     

A Comparative Exploration of the Motivational Factors of Faith-Based and Secular NGOs and Their Actors in Cambodia

ABSTRACT

Secular and faith-based NGOs are significant non-state service providers in the developing world, yet limited research has been conducted comparing their motivational factors. This paper considers the motivations driving the work of Christian faith-based organisations (FBOs) and secular NGOs working with women and children in Cambodia. The qualitative research design included 41 interviews, with respondents from thirteen FBOs and twelve secular NGOs. The paper makes two substantive arguments. First, faith-related motivations were expressions of the ways in which religious faith infused FBOs in the study. Second, the development context in which the organisations worked led to a clear distinction between FBOs and secular NGOs. The paper makes a theoretical contribution about the importance of considering the convergence of both the development context and the infusion of faith in FBOs when examining similarities and differences between these two types of organisations.     

Democracy and the Distribution of NGOs Promoting Renewable Energy in Africa

Abstract

Roughly 60 per cent of Africans lack access to electricity, negatively impacting development opportunities. Non-governmental organisations (NGOs) have started promoting distributed generation – small-scale, localised electricity generation – to change this situation. Despite widespread need, however, the dispersion of these distributed generation NGOs (DG-NGOs) is uneven, with high concentrations in a few African countries. Drawing on an original database and field research, we analyse location variation among DG-NGOs across the continent. We find that DG-NGOs are likely to operate in democratic settings with large populations that lack access to electricity. International DG-NGOs are also likely to operate where aid allocation levels are relatively high.     

Poland,Germany and the EU: Reimagining Central Europe

Abstract

In this article, we look at the fissures in United Europe from both sides of the region where a post-Cold War ‘Middle/Central Europe’ should have been forged. How do leading German and Polish newspapers treat the categories of ‘Central’ or ‘Middle’ Europe relative to the concept of the Eastern–Western European divide and what are the discourses associated with these perspectives? At the time of a looming redefinition of the entire European project, what can media reports from Germany and Poland tell us about its future? We conclude that the media narratives in these two countries portend further tensions for European unity, since the new divisions now overlap the old ones. Our findings have implications for the future of democracy in the newly democratic countries of Central and Eastern Europe, including Poland.     

Global Pressures,National Policies,and Labor Rights in Latin America

This paper examines the impact of countervailing external pressures on labor rights in 17 Latin American countries. On the one hand, these countries have been urged to reform their labor laws and practices to comply with international labor standards, including protections for the collective rights of workers. On the other hand, they have been pressured to adopt more flexible labor markets, which often undermine collective labor organization. After dividing the countries by the type of political regime that prevailed when the pattern of relations between labor and the state was being established, the paper presents and explains the results of indices created to measure two outcomes: labor standards and labor market flexibility. It then analyzes the impact of four types of external actors (the ILO, national governments pursuing trade agreements, multinational corporations, and international financial institutions) on these outcomes, both de jure and de facto. The paper's main finding is that these actors have had an impact on labor outcomes in the region, but that their influence is heavily mediated by domestic factors, particularly historical legacies of state-labor relations.     

Youth perceptions of violence in Western Honduras

Abstract

Youth violence is a growing challenge worldwide, particularly in countries that are experiencing extreme social disorganisation. This is exemplified in Honduras which has been one of the top five countries in the world for intentional homicides for over 20 years. While many studies have examined youth violence in urban cities, few have researched youth violence in rural zones. This study presents a case study using social disorganisation theory to investigate the perceptions of 40 youth in rural and peri-urban Santa Rosa de Copán, Honduras, regarding what drives violence and the potential solutions. Consistent with social disorganisation theory, our results demonstrate that youth view violence as an opportunity pathway resulting from economic deprivation, disruptions to the family and neighbourhood, lack of or poorly functioning external agencies and conflicting moral values. There are significant gender differences in the results, with young men pointing to several issues that challenge masculine hegemonic gender norms such as the desire for love and belonging, participation in education and the role of policing.