Latest updates on ACP-EU governance compiled by ECDPM

ECDPM Weekly Compass -- Issue 111 -- 25 May 2012

cotonou_online — Fri, 25 May 2012 15:17:18 +0000

* European Report on Development 2012 out: 'Business as usual no longer an option' * Changes in the EU’s 'Agenda for Change'? * Post-2015: Monitoring financing for development and 'development friendliness' * EU-Africa trade agreement live, threat to end market access still looms * Aid for Trade and innovative financing * African Union response to Arab Spring an exception?

Hands on or hands off for budget support? Overseas Development Institute. 23 May 2012.

cotonou_online — Fri, 25 May 2012 09:21:55 +0000

Enthusiasm for budget support has waned. Last year four major bilateral budget support donors (the UK, Germany, the Netherlands and Sweden) signalled plans to slash their allocations for general budget support – a trend fuelled by dissatisfaction with its assessed impact. However, Friday’s Independent Commission for Aid Impact (ICAI) report on the ‘management of UK budget support operations’ paints a more optimistic picture.

How tax can reduce inequality. OECD Observer. Maya 2012.

cotonou_online — Fri, 25 May 2012 08:54:54 +0000

A rising tide may not now lift all boats, to misquote US President Kennedy’s original analogy made in 1963 linking economic growth to prosperity for all. Can governments maintain the social cohesion needed for sustainable, long-term growth? Supporting an equitable income distribution remains one of the key goals of fiscal (and tax) policy.

Opening Pandora's Box. The New Wave of Land Grabbing by the Extractive Industries and the Devastating Impact on Earth. Gaia Foundation. February 2012.

cotonou_online — Fri, 25 May 2012 03:28:16 +0000

Poverty Reduction and Pro-Poor Growth. The Role of Empowerment. OECD. 11 May 2012.

cotonou_online — Thu, 24 May 2012 11:27:11 +0000

Empowerment of those living in poverty is both a critical driver and an important measure of poverty reduction. It is the decisions and actions of poor people themselves that will bring about sustainable improvements in their lives and livelihoods. Inequitable power relations exclude poor people from decision-making and prevent them from taking action. Sustainable poverty reduction needs poor people to be both the agents and beneficiaries of economic growth - to directly participate in, contribute to and benefit from growth processes. Strengthening poor people’s organizations, providing them with more control over assets and promoting their influence in economic governance will improve the terms on which they engage in markets. This economic empowerment combined with political and social empowerment will make growth much more effective in reducing poverty. This report aims to build donor understanding of empowerment and how best to support it.

European Parliament resolution on the proposal for an EU Council directive on a common system of financial transaction tax. 23 May 2012.

cotonou_online — Thu, 24 May 2012 08:20:22 +0000

Natural resources, weak states and civil war. Can rents stabilize coup prone regimes? The World Bank. May 2012.

cotonou_online — Wed, 23 May 2012 14:36:31 +0000

State weakness is broader than implied previously in the civil war literature, and that particular types of weakness in interaction with natural resources have aggravating or mitigating consequences for the risk of civil war. While in anocracies or unstable regimes natural resources can be expected to increase the risk of civil war, we suggest that resource wealth allows weak leaders to stabilize their relationship with their inner elite circle. In particular, for regimes at risk of coup d'etat, the availability of substantial resources is more likely to be channeled in ways that deter rebellion, plausibly countering the grievances generated by natural resources and rebels' viewing of such resources as a prize for taking over the state. Data from 1946-2003 and multiple empirical operationalizations broadly support our argument. These findings are consistent with work showing that resource rents can induce stability in state - society relationships

Oil wealth and budget transparency. Making budgets more transparent in oil rich states. Open Budgets Blog. 14 May 2012.

cotonou_online — Wed, 23 May 2012 14:13:42 +0000

In the OBI working paper series that we have been posting about recently, Michael Ross of UCLA returns to the question of the resource curse (click here for his paper). He looks specifically at how a country’s mineral wealth affects the transparency of the government’s budget. He finds that the budget transparency of countries with oil and those with other mineral riches is not impacted on in the same way. Just like Wehner and de Renzio, his research suggests that the solution to the puzzle of what drives budget transparency in resource rich countries, lies in domestic factors.

The Management of UK Budget Support Operations. UK Independent Commission for Aid Impact. 18 May 2012.

cotonou_online — Wed, 23 May 2012 14:00:30 +0000

ICAI concludes that the practical value of budget support varies substantially depending on the country context and the dynamics of the partnership. Budget support, aid given directly to a recipient government, represents 15% of the UK’s bilateral aid budget – £643m in 2010-11. The ICAI report concludes that, in the right conditions, budget support is an effective way of providing development assistance but its practical value varies according to the country context. Overall rating – Green-Amber DFID should explore new ways of combining budget support with other aid instruments so as to increase the value of its overall assistance. This may indicate a need for a more hands-on approach to accompany budget support. While this approach of direct funding helps to increase recipient government accountability it is important not to get locked in to providing large volumes of budget support where that value is not clear.

Tax incentives and revenue losses in Uganda. A race to the bottom? eurodad. 18 May 2012.

cotonou_online — Wed, 23 May 2012 13:40:09 +0000

Every year Uganda sacrifices an amount equal to nearly twice its entire health budget due to its use of tax incentives such as tax holidays for foreign businesses. Worse still, research shows that these incentives are not necessary to attract investments to Uganda. Government needs to remove excessive tax incentives, promote transparency on the tax incentives they give, and coordinate with the East African Community to avoid harmful tax competition.