Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/298181 
Year of Publication: 
2022
Series/Report no.: 
AGDI Working Paper No. WP/22/088
Publisher: 
African Governance and Development Institute (AGDI), Yaoundé
Abstract: 
With the global sustainable development goals, it has become imperative for developing countries, especially sub-Saharan African countries, to think inward on ways to increase domestically mobilized revenue. The recovery of the global economy within the last few years has increased foreign assistance inflow into African countries. However, the direction of its impact on domestic mobilized revenue is unclear. This study revisited the relationship between foreign aid and domestic mobilized revenues for 32 sub-Saharan African countries using a more recent and novel dataset on tax revenue. We employed instrumental fixed effect Quantile regression, a novel technique in aid and tax revenue literature. The study findings show that the impact of foreign aid varies across tax revenue distribution. We found a negative and significant effect in countries with high tax effort, while the effect is insignificant in countries with low tax effort sub-Saharan African countries, especially those with low tax revenue, need to use foreign aid to strengthen their tax administration and adopt modern tax revenue collection technologies. As a result, sub-Saharan African countries should request advanced countries or donors to provide technical support in tax revenue mobilization.
Subjects: 
Foreign aid
Tax revenue
Quantile regression
Sub-Saharan Africa
JEL: 
F35
H2
H27
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.