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To recover from the COVID19 pandemic and make progress towards the Sustainable Development Goals, finance for development must increase from “billions to trillions” per year. Prospects increased for public and private financing from the developed to the developing world have been muted by the pandemic, so, the key to sustainable human and infrastructure investment over the long term will be increased domestic resource mobilization (DRM)—the process through which low-income and lower middle-income countries raise and spend their own funds to provide for their people. The 2015 Addis Agenda, and the ensuing Addis Tax Initiative, enshrine global DRM aspirations and have prompted an acceleration in DRM-related technical assistance to LIC/LMICs. There is increased recognition that DRM must be done in such a way to increased equitable and sustainable growth.
CGD's work in this area seeks to enhance understanding of the political and economic constraints to increasing DRM and the distributional consequences of DRM policies. To support this learning process, CGD will:
Establish a common understanding of what constitutes “good” DRM;
Understand what the structural and political constraints are to increasing DRM;
Explore what multidimensional measures are best suited to track the efficiency and distributional impact of DRM;
Assess the effectiveness of policy advice, financial support and technical assistance for DRM from multilateral and bilateral institutions, particularly from the LIC/LMIC policymakers’ perspective;
Understand the impact that international finance and tax regimes have on LIC/LMICs and propose reforms that will assist LIC/LMIC development;
Develop an agenda of new ideas and actions to enhance DRM support and effectiveness.
This will be done in close consultation with bilateral and multilateral partners and developing country officials.
Domestic revenue mobilization (DRM) seems set to be a priority area for the US Agency for International Development (USAID) under Administrator Mark Green. The challenge has been in tracking US (and other donors’) support for DRM activities. While the data only covers projects in 2015 so far, it contributes to a better understanding of what US aid agencies are doing in the DRM space and where they are working. If the United States is looking to step up assistance in this area, it will be instructive to understand the landscape of current efforts.
With the third international Financing for Development conference taking place only a week from now in Addis Ababa, I sit down with Charles Kenny to take stock of this marquee event. We discuss its importance and what one might reasonably hope is achieved there.