This paper is part of the UNRISD project on The Politics of Domestic Resource Mobilization (UNRISD 2012). Its specific contribution is with regards to the interaction between fiscal performance and donor aid allocation in developing countries. While several studies have examined whether aid affects fiscal performance, there has been no systematic study of whether fiscal capacity and performance in developing countries has any impact on donor aid allocation decisions. We argue that the latter is an important issue given that domestic resource mobilization (DRM) is being increasingly recognized as an important component of financing for development, and that some donors are beginning to pay more attention to taxation and fiscal capacity.
The Road to Addis and Beyond Series brings together a number of short essays that engage with current Financing for Development debates and to this end is being launched to coincide with the final drafting session of this summer’s Third International Conference on Financing for Development. Learn more about the series here.