## Foreign Aid and Revenue: Still a Crowding Out Effect?

_IMF Working Papers, July 1, 2012_

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## Bibliographic details
- Authors: Ernesto Crivelli, Sanjeev Gupta, Priscilla S Muthoora, Dora Benedek
- Published: July 1, 2012
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781475505344.001

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### Overview and study scope
- Authors: Ernesto Crivelli, Sanjeev Gupta, Priscilla S Muthoora, Dora Benedek
- Publication date: July 1, 2012
- Coverage: 118 countries for the period 1980 - 2009
- Publication: IMF Working Papers, Working Paper No. 2012/186
- Pages: 33
- Volume: 2012
- Issue: 186
- DOI: https://doi.org/10.5089/9781475505344.001
- ISBN: 9781475505344
- ISSN: 1018-5941

### Main findings on aid and domestic tax revenues
- The paper reexamines the relationship between aid and domestic tax revenues using a more recent and comprehensive dataset covering 118 countries for the period 1980 - 2009.
- Overall result: a negative association between net Official Development Assistance (ODA) and domestic tax revenues is supported.
- The negative association appears to have weakened, reflecting greater efforts at mobilizing domestic revenues in many countries.

### Composition of aid matters
- ODA grants are associated with lower domestic tax revenues.
- ODA loans are not associated with lower domestic tax revenues.

### Tax-type specific associations
- Net ODA and grants are negatively associated with:
  - VAT revenues
  - Excise tax revenues
  - Income tax revenues
- Net ODA and grants are positively associated with:
  - Trade taxes

### Heterogeneity of effects
- Aid has a particularly strong negative effect on domestic tax revenues in:
  - Low-income countries
  - Countries with relatively weak institutions

### Subject areas and keywords
- Subject: Estimation techniques, Loans, Revenue administration, Taxes on trade, Value-added tax
- Keywords: administration reform, ODA grant, ODA Loans, tax revenue, trade tax, WP

*Source: IMF Working Paper "Foreign Aid and Revenue: Still a Crowding Out Effect?", Ernesto Crivelli, Sanjeev Gupta, Priscilla S Muthoora, Dora Benedek, July 1, 2012.*

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/foreign-aid-and-revenue-still-a-crowding-out-effect-26085_