Birds of a Feather: Fiscal Conditionality and Recipient Country Ownership in Aid Allocation

29 Pages Posted: 23 Nov 2008

See all articles by Francis Andrianarison

Francis Andrianarison

affiliation not provided to SSRN

Sylvain Dessy

Université Laval - Département d'Économique

Date Written: November 20, 2008

Abstract

This paper attempts to reconcile aid-conditionality and recipient country ownership of its development process as mutually compatible ingredients of aid effectiveness. To be effective, aid itself must contribute to the end of aid. For this happen, the recipient government must, in the meantime, develop a capacity for becoming financially self-reliant. However, even the government of a country that owns its development process does not necessarily have the incentive to become financially self-reliant when aid resources are available. Conditioning aid allocation to the recipient government's commitment to reach a prescribed tax revenue target may therefore help recipient countries gain from aid while weaning themselves from chronic dependence on it. We make these points using an endogenous growth model featuring domestic tax revenue and grant inflows as the mechanism for mitigating school user fees constraining education access in recipient countries.

Keywords: Development assistance, fiscal conditionality, school user fees, intertemporal

JEL Classification: D90, F35, H42, H52, I22, J24, O11

Suggested Citation

Andrianarison, Francis and Dessy, Sylvain, Birds of a Feather: Fiscal Conditionality and Recipient Country Ownership in Aid Allocation (November 20, 2008). Available at SSRN: https://ssrn.com/abstract=1304642 or http://dx.doi.org/10.2139/ssrn.1304642

Francis Andrianarison

affiliation not provided to SSRN ( email )

Sylvain Dessy (Contact Author)

Université Laval - Département d'Économique ( email )

2325 Rue de l'Université
Ste-Foy, Quebec G1K 7P4 G1K 7P4
Canada

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