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Aid Fragmentation and Tax Revenue Mobilization in Developing Countries

Author

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  • Ali Compaoré
  • Abrams M. E. Tagem

Abstract

A burgeoning empirical literature estimates the impact of aid fragmentation on development outcomes in recipient countries, most of the findings suggesting that aid fragmentation is detrimental. This paper adds to the literature by estimating the impact of aid fragmentation on tax revenue mobilization in 90 developing countries from 2000 to 2020. The paper shows that aid fragmentation, as measured by the Herfindahl index, has a negative impact on recipient countries' tax performance, specifically by undermining the quality of tax policy and administration. The paper also explores the impact of aid fragmentation on tax components and finds convincing evidence that broad‐based taxes are impacted by aid fragmentation, whereas narrow‐based taxes are not. This is because tax reform requires more coordinated donor engagement, the absence of which has more profound negative effects on broad‐based taxes because the political and organizational efforts needed to invest in developing them are larger than those for narrow‐based taxes.

Suggested Citation

  • Ali Compaoré & Abrams M. E. Tagem, 2026. "Aid Fragmentation and Tax Revenue Mobilization in Developing Countries," Journal of International Development, John Wiley & Sons, Ltd., vol. 38(2), pages 330-346, March.
    • Handle: RePEc:wly:jintdv:v:38:y:2026:i:2:p:330-346
    DOI: 10.1002/jid.70044
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