Tax Treaties for Investment and Aid to Sub-Saharan Africa: A Case Study

70 Pages Posted: 19 Apr 2005 Last revised: 7 Jan 2018

Date Written: April 1, 2005


Tax treaties are believed to increase cross-border trade and investment by reducing international tax burdens. The pursuit of tax treaties is therefore advanced as an integral component of U.S. foreign aid policy, which increasingly favors indirect assistance in the form of fostering trade and investment over traditional direct assistance in the form of donor funding. The importance of tax treaties is especially advanced in the context of U.S. relations with Sub-Saharan Africa, where poverty-related conditions are extreme and foreign trade and investment minimal. Yet despite many years of consistent promotion there are currently no tax treaties between the United States and the developing countries of Sub-Saharan Africa. This article explains the apparent contradiction by presenting as a test case a hypothetical tax treaty between the U.S. and Ghana. The case study illustrates that in today's global commercial climate, traditional tax treaties provide few tax benefits to and indeed may negatively impact private investors. Consequently, the continuing absence of tax treaties can be explained by the lack of incentives for private investors to pressure the U.S. government to conclude these agreements. This article concludes that means other than increasing the international network of tax treaties must be pursued if the goal to increase trade and investment to developing countries is to be achieved.

Keywords: Fiscal Policy, Public Expenditures Investment and Finance, International Taxation

JEL Classification: E62

Suggested Citation

Christians, Allison, Tax Treaties for Investment and Aid to Sub-Saharan Africa: A Case Study (April 1, 2005). Brooklyn Law Review , Vol. 71, 2005, Northwestern Public Law Research Paper No. 05-10; Northwestern Law & Econ Research Paper No. 05-15, Northwestern Law & Econ Research Paper No. 05-15, Available at SSRN: or

Allison Christians (Contact Author)

McGill University - Faculty of Law ( email )

3644 Peel Street
Montreal H3A 1W9, Quebec

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