Publication

This paper examines whether fiscal capacity and performance in developing countries has any impact on donor aid allocation decisions. After reviewing the relevant literature, it gives a statistical analyses of overall aid allocation for the period 1992-2010 and finds that there is hardly any correlation between overall aid and fiscal performance and capacity. The authors then look at four case studies to evaluate fiscal performance and donor involvement in taxation and public financial management. They conclude that despite donors’ public calls on developing countries to improve fiscal performance, evidence does not suggest that donors collectively pay attention to fiscal performance when allocating aid.