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Aid and Taxation in Ethiopia

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  • Giulia Mascagni

Abstract

The relation between aid and taxation is largely contested in the literature. On the one hand, aid may act as a substitute for tax revenue and thus have a crowding-out effect. It can also have a detrimental effect on domestic tax institutions. On the other hand, it can promote and support tax mobilisation through policy advice, technical assistance, and conditionality, in addition to more indirect channels. The case of Ethiopia supports the existence of a positive relation between aid and tax, which occurs mainly through policy advice and technical assistance rather than conditionality. This finding is grounded in both quantitative and qualitative analysis.

Suggested Citation

  • Giulia Mascagni, 2016. "Aid and Taxation in Ethiopia," Journal of Development Studies, Taylor & Francis Journals, vol. 52(12), pages 1744-1758, December.
    • Handle: RePEc:taf:jdevst:v:52:y:2016:i:12:p:1744-1758
    DOI: 10.1080/00220388.2016.1153070
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    References listed on IDEAS

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    1. Alemayehu Geda & Abebe Shimeles, 2005. "Taxes and Tax Reform in Ethiopia, 1990-2004," WIDER Working Paper Series RP2005-65, World Institute for Development Economic Research (UNU-WIDER).
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    11. Giulia Mascagni & Emilija Timmis, 2017. "The Fiscal Effects of Aid in Ethiopia: Evidence from CVAR Applications," Journal of Development Studies, Taylor & Francis Journals, vol. 53(7), pages 1037-1056, July.
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    3. Asongu, Simplice & Ezeaku, Hillary, 2020. "Aid Grants vs. Technical Cooperation Grants: Implications for Inclusive Growth in Sub-Saharan Africa, 1984-2018," MPRA Paper 107528, University Library of Munich, Germany.
    4. Mawejje, Joseph & Sebudde, Rachel K., 2019. "Tax revenue potential and effort: Worldwide estimates using a new dataset," Economic Analysis and Policy, Elsevier, vol. 63(C), pages 119-129.
    5. Mawejje, Joseph, 2019. "Natural resources governance and tax revenue mobilization in sub saharan Africa: The role of EITI," Resources Policy, Elsevier, vol. 62(C), pages 176-183.
    6. Tom Lavers, 2016. "Social protection in an aspiring ‘developmental state’: The political drivers of community-based health insurance in Ethiopia," Global Development Institute Working Paper Series esid-071-16, GDI, The University of Manchester.
    7. Muhammad Athar Nadeem & Zhiying Liu & Haji Suleman Ali & Amna Younis & Muhammad Bilal & Yi Xu, 2020. "Innovation and Sustainable Development: Does Aid and Political Instability Impede Innovation?," SAGE Open, , vol. 10(4), pages 21582440209, November.
    8. Broich, Tobias, 2017. "U.S. and Soviet foreign aid during the Cold War: A case study of Ethiopia," MERIT Working Papers 2017-010, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    9. Adebayo, Eric & Lashitew, Addisu A. & Werker, Eric, 2021. "Is conventional wisdom about resource taxation correct? Mining evidence from transparency reporting," World Development, Elsevier, vol. 146(C).
    10. Michael Takudzwa Pasara & Michael Zuze, 2021. "Can Remittances Boost Tax Revenues in Zimbabwe? A Secondary Quarterly Time Series Analysis," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 9(2), pages 128-144.
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    12. Roel Dom, 2017. "Semi-Autonomous Revenue Authorities in Sub-Saharan Africa: Silver Bullet or White Elephant," Discussion Papers 2017-01, University of Nottingham, CREDIT.
    13. Haldar, Anasuya & Sethi, Narayan, 2022. "Effect of sectoral foreign aid allocation on growth and structural transformation in sub-Saharan Africa—Analysing the roles of institutional quality and human capital," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 1010-1026.
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