About the Project
The project seeks to contribute to global debates on the political and institutional contexts that enable poor countries to mobilize domestic resources for social development. It will examine the processes and mechanisms that connect the politics of resource mobilization and demands for social provision; changes in state-citizen and donor-recipient relations associated with resource mobilization and allocation; and governance reforms that can lead to improved and sustainable revenue yields and services.
The Research Issue in Context
Improving human well-being has been at the centre of international development policy in recent years. This is particularly evident in the Millennium Development Goals. However, many poor countries have weak fiscal capacity and would require additional resources to honour their commitments. Estimates by the MDG Gap Task Force Report show big gaps in meeting aid commitments that are targeted to less developed countries. It is increasingly clear that developing countries cannot only rely on aid to transform their economies and meet the needs of their citizens. They will have to increase efforts in mobilizing domestic resources. Indeed, the importance of domestic resource mobilization is becoming evident to both recipient and donor governments. From the perspective of recipient governments, even if aid improves substantially, it often comes with conditions, such as buying donor goods and services, giving donors considerable space in the policy process, as well as delays and uncertainties in aid disbursement. At the same time, donors increasingly hold the view that aid can be made more effective when linked to efforts by recipient governments to mobilize domestic resources. In the Monterrey Consensus that followed the Conference on Financing for Development in 2002, donors pledged to increase aid in return for improved tax efforts by developing countries. A growing body of literature even sees aid as a curse that stifles development and democratic accountability of governments to citizens. Discounting the more extreme calls for dismantling aid, one interesting view is that of restoring aid to its original goal of filling domestic resource gaps. From this perspective, if aid and domestic resource mobilization work in tandem, recipient governments will be more responsive to the constituencies that provide the resources, that is, citizens and donors.
However, support for domestic resource mobilization does not guarantee that the desired amount of resources will be generated, let alone allocated to preferred programmes, or that the burden of resource extraction will be distributed fairly among different population groups. Issues of contestation and bargaining are bound to influence the extent to which governments can succeed in extracting resources from their populace. Bargaining may involve acceptance by citizens of governments’ tax plans in exchange for services, social protection, employment guarantees and income support—making the politics of domestic resource mobilization inextricably inter-connected with the politics of social development.
Research Objectives and Questions
The project aims to contribute to discussions about how to:
- bridge the funding gaps for meeting key global development targets and social programmes in poor countries;
- enhance national ownership of development programmes and policy space, which is linked to improved fiscal capacity;
- improve understanding of the politics of revenue and social expenditure bargains and effective accountability of governments to citizens; and
- connect the literatures on the politics of resource mobilization and the politics of social provision in poor countries.
There are three types of literature on domestic resource mobilization. The first is work carried out by the international financial institutions on tax reform. This work focuses on how reforms can facilitate trade liberalization by substituting consumption taxes for trade taxes; producing neutral, simplified and predictable tax systems; and discouraging high marginal tax rates. The second type of work is by multilateral/bilateral institutions and scholars concerned with the developmental potential of expanding the domestic revenue base of poor countries. It recognizes the importance of domestic revenues in improving fiscal space and democratic accountability, but does not systematically address these governance issues or the political contexts that lead to improved revenue yields. The third type of literature addresses governance issues directly. It highlights the importance of taxation in state building and democratic accountability. However, its approach to state building is broad; and although social development is acknowledged, it is not central in the analysis of bargaining regimes that shape the politics of domestic resource mobilization.
This project builds on these three sets of literature by focusing on three themes that will help connect the politics of domestic resource mobilization and demands for social services.
Contestation, bargaining and outcomes.
Domestic resource mobilization generates conflicts over types of resources to be mobilized, who pays, who and what is exempted, how much should be paid, and how the resources collected should be allocated across sectors, groups and communities. This suggests that issues of coverage, tax and premium levels, and outcomes in terms of resource yields, allocation and benefits cannot be predetermined. This theme will examine the nature of resource bargains, types of resources and social programmes involved in bargains; trade-offs among competing programmes and resources, and resource yields.
Changes in key relationships.
This theme seeks to understand changes in key relationships that can be traced to the dynamics of resource mobilization and allocation. It will engage the literature on taxation and governance, which emphasizes the importance of contractual relations between citizens and states for effective mobilization of resources. Two types of relationships will be examined: state-citizen relations; and donor-recipient relations. To what extent do the politics of resource mobilization lead to a redefinition of state-citizen relations? Does improvement in domestic resource mobilization lead to more fiscal space and autonomy in policy making?
Success in resource mobilization and service provision requires institutional development. To support stabilization policies and revenue mobilization, institutions in the financial sector—ministries of finance, tax offices and central banks—have been strengthened. Independent revenue authorities provide incentives on careers, pay and training, as well as granting of autonomous powers to officials tasked with revenue collection. However, institutions concerned with service provision have been neglected and are usually the first targets for expenditure cuts. This theme will examine the extent to which the politics of domestic resource mobilization generate pressures for upgrading of institutions entrusted to deliver services.
Researchers will generate primary data and analyse official records or administrative data, public finance statistics, documents of companies and advocacy groups, and published information to address the three themes of the project. The research will focus on low and lower middle-income countries. Efforts will be made to ensure that the countries selected will represent different types of economies, as the structures of economies and development paths may have a bearing on tax strategies and resource yields. The selection will be based on one or two countries in which the agricultural sector is dominant in terms of GDP, employment and exports; one or two countries in which mineral rents are important in terms of GDP and exports; and at least one country with a growing manufacturing sector in which manufacturing products have overtaken agriculture in export value. Preference will be given to countries with more open political systems and where contestation over tax issues has been prominent.
Country-level Research Teams
- Bolivia: Santiago Oller Daroca, Verónica Paz Arauco and Wilson Jiménez Pozo
- Nicaragua: Gloria Carrión, Guy Delmelle, Hilda Gutiérrez Elizondo, René Mendoza and Roberto Molina
- Uganda: Anne-Mette Kjaer, Marianne Ulriksen, Jalia Kangave and Mesharch Katusiimeh
- Zimbabwe: Richard Saunders, Godfrey Kanyenze, Alan Martin, Shamiso Mtisi, Rekopantswe Mate and Tafadzwa Chikumbu
Sources of Funding
- Bilateral donors
- Multilateral institutions
- Civil society advocacy groups concerned with taxation, service provision and accountability
This project is made possible by the generous support of the Swedish international development agency (Sida) and the support of UNRISD’s core funders: Sweden, Switzerland and the United Kingdom.
Outputs and Activities
Commissioned Thematic Papers
Country Research Reports
The Road to Addis and Beyond Series
Overview Think Piece: Destination: Socially Sustainable Development. Will Addis Lead the Way?—
Katja Hujo, UNRISD
- Bridging the Gap: Sovereign Wealth Funds and Financing for Development—Sven Behrendt, GeoEconomica
- Let’s Walk Our Talk: Making Concrete Commitments on Financing the Sustainable Development Agenda—Inge Kaul, Hertie School of Governance and Donald Blondin, Leiden University
- A Global Fund for Social Protection Floors: Eight Good Reasons Why it can Easily be Done—Michael Cichon, Maastricht Graduate School of Governance and International Council on Social Welfare
- Fair Pensions in an Ageing World—Manfred Nitsch, Freie Universität Berlin
- International Corporate Tax Reform is Critical to Financing Sustainable Development—Erika Dayle Siu, Tax and Development Consultant
- Revenue Bargains Key to Financing Africa’s Development—Yusuf Bangura, Department of Political Science, Fourah Bay College, University of Sierra Leone, and UNRISD
- Promoting Tax Bargains in Uganda and Beyond: The Importance of Civil Society and Parliamentarians—Jalia Kangave, Independent Tax and Legal Researcher
- Investing in the SDGs: Whose Business?—Aldo Caliari, Center of Concern
- An Orphaned Tax Agenda? Sacrificing Good Governance and Tax Justice in the Addis Ababa Outcome—Manuel Montes, South Centre
- Financing Development: Tangible Tools to give Meaning to Fine Words—Eddie Rich, Extractive Industries Transparency Initiative
- Addis Ababa Financing for Development Conference: A Missed Opportunity to Discuss the Role of International Public Finance Post-2015—Gail Hurley, UNDP
- Fair Compensation and other Prerequisites to Mining for Development—Cielo Magno, University of the Philippines
- Beyond Addis: How Can We Finance the SDGs?—Matthew Martin, Development Finance International
- Why the Addis Debt Chapter Falls Short—Juan Pablo Bohoslavsky, United Nations Independent Expert on Foreign Debt and Human Rights
- Revenue Mobilization for Gender Equity—Caren Grown, Word Bank Group, and Sudarshan Gooptu, World Bank Group
- Shifting Responsibilities without Changing the Balance of Power: What Chance of Equality with the Addis Ababa Action Agenda?—Nicole Bidegain Ponte, Universidad de la República, Uruguay and DAWN; Marina Durano, University of the Philippines-Diliman and DAWN and Corina Rodríguez Enríquez, National Council of Research (Conicet), Argentina, and DAWN
- The Invisible Player: Social and Solidarity Finance for Financing for Development, Marie-Adélaïde Matheï, UNRISD
- Delivering Social Protection Systems for All: Why Taxes Matter, Francesca Bastagli, ODI and Centre for Analysis of Social Exclusion at LSE
Edited overview volume
- Political Economy of Citizenship Regimes: Tax in India and Brazil—Aaron Schneider, University of Denver
- Obstacles to Increasing Tax Revenues in Low Income Countries—Mick Moore, IDS (University of Sussex) and the International Centre for Tax and Development
- State-Business Relations and the Financing of the Welfare State in Argentina and Chile: Challenges and Prospects—Jamee K. Moudud, Sarah Lawrence College; Esteban Perez Caldentey, ECLAC; and Enrique Delamonica, UNICEF Nigeria and CROP
- Aiding Social Transfers in Low-income Countries: Is there a Catalytic Effect?—Cécile Cherrier, independent consultant and Maastricht Graduate School of Governance/UNU-MERIT
- Extractive Industries, Revenue Allocation and Local Politics—Javier Arellano, University of Deusto and Andrés Mejía Acosta, King’s College London
- Fiscal Capacity and Aid Allocation: Domestic Resource Mobilization and Foreign Aid in Low-Income Countries—Aniket Bhushan, North-South Institute; and Yiagadeesen Samy, Carleton University
- The Politics of Domestic Resource Mobilization for Social Development—Katja Hujo with the contribution from Yusuf Bangura, Aniket Bhushan, Yiagadeesen Samy, Cécile Cherrier, Mick Moore, Wilson Prichard, Thandika Mkandawire, Aaron Schneider, Enrique Delamonica, Jamee K. Moudud, Esteban Pérez Caldentey, Francisco Javier Arellano-Yanguas, Andrés Mejía-Acosta, Maria Verónica Paz Arauco, Gloria Carrión Fonseca, Anne Mette Kjær, Marianne S. Ulriksen, Richard Saunders