Effet de l’aide publique au développement sur la mobilisation des ressources fiscales dans les pays de l’UEMOA

BAYALE, Nimonka (2019): Effet de l’aide publique au développement sur la mobilisation des ressources fiscales dans les pays de l’UEMOA.

Abstract

In WAEMU countries, the lack of consistent domestic resources for financing development is a real financial handicap. Foreign aid is necessary. However, economic literature is not unanimous on the ability of foreign aid to promote fiscal resources mobilization. In this paper, we analyze the effect of different forms and components of international aid on tax revenues of WAEMU countries using WDI, OECD and BDSM databases. We apply the instrumental variable method to a panel data set covering the period 1985-2016. In our analyzes, we first distinguish bilateral and multilateral aid. Then we also differentiate concessional aid, technical assistance and grants or loans contained in international aid. The results indicate firstly that multilateral aid has a positive and significant impact on tax revenues, while bilateral aid does not. Secondly, with axamine the decomposed effect of aid. Our results show that concessional form of aid and technical assistance enhance fiscal resources mobilization. But loans reduce tax effort. Finally, these results reveal that when aid is taken in aggregate form, its effect on tax revenues is ambiguous. As economic policies implications, we argue that improving institutional quality would make foreign aid efficient in tax collection. We also recommend that foreign aid would be redirected towards investment for effective tax systems in these countries. Moreover, to remedy the disincentive effect created by loans, we particularly argue that they should be channelled more to non-governmental organisations or to the private sector rather than to governments of these countries.

• Item Type: MPRA Paper
• English Title: Effect of foreign aid on fiscal resources mobilization in WAEMU countries
• Language: French
• Keywords: Foreign aid, tax revenues, LSDV-IV estimator, WAEMU
• Subjects: C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C33 - Panel Data Models ; Spatio-temporal Models; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E62 - Fiscal Policy; F - International Economics > F3 - International Finance > F35 - Foreign Aid

References

Addison, T. Morrissey, O et Tarp, F. (2017), « The Macroeconomics of Aid : Overview », The Journal of Development Studies, DOI : 10.1080/00220388.2017.1303669

Agénor, P-R. (2016), « Des promesses et encore des promesses : la volatilité de l’aide et la croissance économique », FERDI, Notes brève N. 148.

Batten A. (2010), « Foreign Aid and the Fiscal Behaviour of the Government in Papua New Guinea », National Research Institute Discussion Paper No. 114

Benedek, D., Crivelli, E., Gupta, S., et Muthoora, P. (2012), « Foreign aid and revenue : Still a crowding out effect ? » : IMF working paper WP/12/86 ; Washington, DC : International Monetary Fund.

Biao, B. (2017), « Analyse des effets de l’instabilité de l’aide publique au développement (APD) sur la croissance économique dans les pays africains », African Development Review, Vol. 29, No. 3, 2017, 416–428.

Bruno G. (2005), « Estimation and inference in dynamic unbalanced panel-data models witha small number of individuals », The Stata Journal, vol.5, n°4, p.473-500

Carter, Patrick. (2013), « Does foreign aid discourage taxation ? » Mimeo : Department of Economics, University of Bristol.

Chaudhry, I. S., et Munir, F. (2010), « Determinants of Low Tax Revenue in Pakistan », Pakistan Journal of Social Sciences (PJSS), 30(2), 439–452.

Clist, P. (2016), « Foreign aid and domestic taxation : Multiple sources, one conclusion », Development Policy Review, 34(3), 365–383. https://doi.org/10.1111/dpr.12154

Clist, P. et O. Morrissey (2011), « Aid and Tax Revenue : Signs of a Positive Effect Since the 1980s », Journal of International Development, 23(2) :165–180.

Djankov, S., J. G. Montalvo and M. Reynol-Querol (2008), « Aid with multiple personalities », Journal of Comparative Economics.

Dedehouanou, E. et Dedehouanou, S., (2017), « Incidence de la fragmentation des aides bilatérales sur l'effort fiscal dans l’UEMOA », Revue Economique et Monétaire, N. 22

Diarra S. (2012) « Chocs et Mobilisation des Recettes Publiques dans les Pays en Développement », Ecole Doctorale de Sciences Economiques et de Gestion, CERDI.

Dickey, D. A., & Fuller, W. A. (1979), « Distribution of the estimators for autoregressive time series with a unit root », Journal of the American Statistical Association, 74, 427–431.

Easterly, W., Levine, R. et Roodman, D. (2004a), « Aid, Policies, and Growth: Comment », American Economic Review, 94 (3), 774-780.

FMI (2017), « Union Economique et Monétaire Ouest Africaine (UEMOA) : Politiques communes des pays membres », Rapport du FMI No. 17/99, International Monetary Fund Publication Services, PO Box 92780, Washington, D.C. 20090.

Gupta, S., B. Clements, A. Pivovarsky and E. R. Tiongson (2004) « Foreign Aid and Revenue Response : Does the Composition of Aid Matter ? », In : (B. Clements, S. Gupta and G. Inchauste, eds.) Helping Countries Develop : The Role of Fiscal Policy. Washington : International Monetary Fund.

Jacquet et Naudet (2006), « Revisiter l’aide publique au développement » Economie internationale 2006/4 (n° 108).

Jeffrey, Scott B. (2015), « Is All Foreign Aid the Same ? : An Empirical Comparison of the Effect of Multilateral and Bilateral Aid on Growth », Undergraduate Economic Review : Vol. 12 : Iss. 1, Article 3.

Heller, S.P. (1975), « A Model of Public fiscal Behavior in Developing Countries : Aid, investment and taxation », American Economic Review, Vol. 65, No.3, pp.429-452.

Hisali, E., et Ddumba-Ssentamu, J. (2013), « Foreign aid and tax revenue in Uganda », Economic Modelling, 30(1), 356–365. https://doi.org/10.1016/j.econmod.2012.09.012.

Kivet J. [1995], « On bias, inconsistency, and efficiency of various estimators in dynamic panel data model », Journal of Econometrics, vol.68, p.53-78.

Nations Unies, (2017), “Financement du développement : questions ayant trait à la mobilisation des ressources publiques intérieures et à la coopération internationale pour le développement”, Note du secrétariat de la CNUCED, novembre 2017.

OCDE (2017), « Coopération pour le Développement : Données et développement », Rapport 2017 ; 9789264277175 (PDF) ; http://dx.doi.org/10.1787/dcr-2017-fr.

Pedroni P. (2004), « Panel cointegration. Asymptotic and finite sample properties of pooled time series tests with an application to the PPP hypothesis », Econometric Theory.

Pedroni P. (1999), « Critical values for cointegration tests in heterogenous panels with multiple regressors », Oxford Bulletin of Economics and Statistics, S1, 61, pp. 653-670.

Radelet, Steven (2006), « A Primer on Foreign Aid », Center for Global Development. Working Paper Number 92.

Stiglitz Joseph (2002), « La Grande Désillusion », Fayard, Paris.

Tavares, J. (2003) : « Does Foreign Aide Corrupt », Economic Letters, vol.79, April, p.99-106.

Thornton, J. (2014) : « Does foreign aid reduce tax revenue ? Further evidence », Applied Economics, 46 :4, 359-373.

UEMOA (2012), « Législation Communautaire sur la Fiscalité », Commission de l’Union Economique et Monétaire Ouest Africaine, troisième édition.

Yohou H. D., Goujon M. et Ouattara W. (2016), « Heterogeneous Aid Effects on Tax Revenues : Accounting for Government Stability in WAEMU Countries », Journal of African Economies, 25 (3) : 468-498.