Do donors care about declining trade revenues from liberalization? An analysis of aid allocation
Year: 2007
Type: report
Abstract: Many developing country governments rely heavily on trade tax revenue.Therefore, trade liberalization can be a potential source of significant fiscal instability, and may affect government spending on development activities.Donor nations may take this into account in making their aid allocation decisions for developing nations.Our findings suggest that bilateral donors provide substantially larger amounts of aid to compensate (or reward) liberalizing recipient nations who also face declining trade tax revenues.Interestingly, these effects are statistically insignificant in the context of multilateral aid.Multilateral donors are more focused on income per capita and may be using it as a de facto measure of average living standards in the recipient nations.
DOI: 10.20955/wp.2007.028
Authors: Subhayu Bandyopadhyay, Javed Younas
Language: English
Subfield: Development
Field: Social Sciences
Domain: Social Sciences
Open Access status: gold
OpenAlex ID: W1564836198