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Public Finance, Aid and Post-Conflict Recovery

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  • James Boyce
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    Abstract

    In the wake of violent conflict, a key element of building a durable peace is building a state with the ability to collect and manage public resources. To implement peace accords and provide public services, the government must be able to collect revenue, allocate resources, and manage expenditure in a manner that is regarded by its citizens as effective and equitable. This paper addresses eight key issues related to this challenge. The first four pertain to resource mobilization: (i) How should distributional impacts enter into revenue policies? (ii) How can postwar external assistance do more to prime the pump of domestic revenue capacity? (iii) Should macroeconomic strictures prescribed for economic stabilization be relaxed to foster political stabilization? (iv) How should the benefits of external resources be weighed against their costs? The second four issues relate to the expenditure side of public finance: (i) How should the dynamics of conflict be factored into public spending policies? (ii) Can the pathologies of a ‘dual public sector’ – one funded and managed by the government, the other by the aid donors – be surmounted by channeling external resources through the government, with dual-control oversight mechanisms to reduce corruption? (iii) How should long-term fiscal sustainability enter into short-term expenditure decisions? (iv) Lastly, is there scope for more innovative solutions to postwar legacies of external debts?

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    Bibliographic Info

    Paper provided by Political Economy Research Institute, University of Massachusetts at Amherst in its series Working Papers with number wp140.

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    Date of creation: 2007
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    Handle: RePEc:uma:periwp:wp140

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    Related research

    Keywords: peacebuilding; revenue mobilization; external assistance; foreign aid; post-conflict transitions; public expenditure; horizontal equity; odious debt;

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    1. Seema Jayachandran, 2004. "Odious Debt," UCLA Economics Online Papers 298, UCLA Department of Economics.
    2. Emran, M. Shahe & Stiglitz, Joseph E., 2005. "On selective indirect tax reform in developing countries," Journal of Public Economics, Elsevier, vol. 89(4), pages 599-623, April.
    3. Howell H. Zee & Vito Tanzi, 2000. "Tax Policy for Emerging Markets," IMF Working Papers 00/35, International Monetary Fund.
    4. Sanjeev Gupta & Shamsuddin Tareq & Benedict Clements & Alex Segura-Ubiergo & Rina Bhattacharya, 2005. "Rebuilding Fiscal Institutions in Post-Conflict Countries," Public Economics 0504010, EconWPA.
    5. Philippe Le Billon, 2003. "Buying peace or fuelling war: the role of corruption in armed conflicts," Journal of International Development, John Wiley & Sons, Ltd., vol. 15(4), pages 413-426.
    6. Alexander Pivovarsky & Benedict J. Clements & Sanjeev Gupta & Erwin Tiongson, 2003. "Foreign Aid and Revenue Response," IMF Working Papers 03/176, International Monetary Fund.
    7. Paul Collier & V. L. Elliott & Håvard Hegre & Anke Hoeffler & Marta Reynal-Querol & Nicholas Sambanis, 2003. "Breaking the Conflict Trap : Civil War and Development Policy," World Bank Publications, The World Bank, number 13938.
    8. S. Illeris & G. Akehurst, 2002. "Introduction," The Service Industries Journal, Taylor & Francis Journals, vol. 22(1), pages 1-3, January.
    9. Michael Keen & Thomas Baunsgaard, 2005. "Tax Revenue and (or?) Trade Liberalization," IMF Working Papers 05/112, International Monetary Fund.
    10. Khattry, Barsha & Mohan Rao, J., 2002. "Fiscal Faux Pas?: An Analysis of the Revenue Implications of Trade Liberalization," World Development, Elsevier, vol. 30(8), pages 1431-1444, August.
    11. Eifert, Benn & Gelb, Alan, 2005. "Improving the dynamics of aid : towards more predictable budget support," Policy Research Working Paper Series 3732, The World Bank.
    12. Frances Stewart, 2000. "Crisis Prevention: Tackling Horizontal Inequalities," Oxford Development Studies, Taylor & Francis Journals, vol. 28(3), pages 245-262.
    13. Peter S. Heller, 2005. "Pity the Finance Minister," IMF Working Papers 05/180, International Monetary Fund.
    14. Réjean Couture & Stephen Evans & Jacques Locat, 2002. "Introduction," Natural Hazards, International Society for the Prevention and Mitigation of Natural Hazards, vol. 26(1), pages 1-6, May.
    15. Todd Moss & Gunilla Pettersson & Nicolas van de Walle, 2006. "An Aid-Institutions Paradox? A Review Essay on Aid Dependency and State Building in Sub-Saharan Africa," Working Papers 74, Center for Global Development.
    16. Norman Gemmell & Oliver Morrissey, 2005. "Distribution and Poverty Impacts of Tax Structure Reform in Developing Countries: How Little We Know," Development Policy Review, Overseas Development Institute, vol. 23(2), pages 131-144, 03.
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