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Paper short abstract:

We use the paper to examine the shifting boundaries and ideas of development financing. We examine recent trends and changes and what these mean for who gets to participate in development financing and on what terms.

Paper long abstract:

What is development financing, who should engage in it, and on what basis? We consider this question through a study of contemporary policy trends, exploring the shifting boundaries and ideas of development financing. Our analysis draws from sociological theorising on moral economies which draws attention to the underlying norms that guide, shape and limit economic activity. We apply this lens to materials from key policy for a such as the Financing for Development initiative, aid ‘modernisation’ agenda and ‘beyond aid’ approaches, The Summit for a New Global Financing Pact, and progress on global tax policy reforms. We highlight differing and sometimes opposing visions for redistribution that circulate within the decolonial turn in development financing, including through the Bridgetown Initiative and advocacy for reparative justice. We ask what these heterogenous visions mean for the (de)legitimisation of specific actors and forms of resource transfer, for development outcomes, and for the fragile progress towards the Sustainable Development Goals. We conclude by highlighting opportunities arising for research and policy in this area.

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Paper short abstract:

Shifting focus from aid to development tends to legitimize the strategic use of aid to catalyze private investment in developing countries. This paper analyzes an aid-financed railway construction project in Bangladesh to explore what redistributive justice such financing is intended to serve.

Paper long abstract:

Development finance in a post-aid world is intended to move beyond aid and to enhance development effectiveness. The use of foreign aid to finance the construction of urban infrastructure in developing countries is thus viewed as one effective way of catalyzing development by stimulating private investment. This trend may be more pronounced in Asia where Japan and China compete in infrastructure investment. Japan presided over the Leading Group on Innovative Financing for Development in 2019 and is shifting its traditional development finance approaches towards blended finance initiatives. The narrative of ‘horizontal partnership’ between countries of the Global North and South legitimates the expectation of mutual benefits arising from aid-financed infrastructure projects facilitating business investment.

Financing the construction of public infrastructure such as railways as a development project can bring multiple developmental benefits. Offered as a package, a railway project mobilizes not only materials and technologies from a donor country but an amalgam of administrative and financial techniques. It creates jobs, improves air quality, and serves to democratize people’s use of time, energy, and space. Yet there are questions about how resource allocation is negotiated among stakeholders including governments, private companies, local communities and citizens, as well as Northern taxpayers. This paper explores the question of redistribution by looking into Japan’s financing of the Dhaka Metro Rail and argues that the developmental benefits for Bangladesh must be weighed against Japan’s developmentalist foreign aid policy as a means to revive its railway industry, and against its modernizing overtones.

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Paper short abstract:

Shifting focus to public-private-partnerships model as a sure means of implementing crucial and mega development projects in Africa in the face of diminishing tax revenue occasioned by international tax base erosion and profit shifting practises, especially by multinational enterprises.

Paper long abstract:

Tax revenue in the Global South, especially in Africa, is hampered by among other challenges, the escalation of international tax base erosion and profit shifting schemes practised by many multinational enterprises in their various jurisdictions of economic presence. These enterprises take advantage of schemes such as the vague definition of permanent establishment, for the purpose of determining and assigning taxation rights, double taxation treaties and the attendant "treaty shopping" tendencies by these companies, reduced accountability in the application of arms-length principle in pricing of the intangibles in related party transactions, among others. Tax revenue is also affected by emerging factors such as the emergency of the digital commerce and the problem of apportioning taxation rights in the face of less developed digital back borne infrastructure and lack of a synchronised economic systems due to informalities in the less developed jurisdictions. The other risk on taxation is the recent wave of litigating tax policy changes, especially in Kenya, that is seen to stall government efforts in resource mobilisation to finance development projects amidst skyrocketing public debt stock. To ensure redistributive development, this paper will suggest innovations that could be adopted to address tax and debt challenges and it would be shown that this, coupled with focusing on the public-private-partnerships model of financing selected high impact development project would yield much needed reprieve by shifting implementation of big development projects from the government budget system. This would create fiscal space to accommodate other critical budgetary needs for shared prosperity.

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Paper short abstract:

Debt-for-nature swaps represent a renewed attempt by sovereign creditors to stipulate how borrowing states spend debt relief, using the rhetoric of climate action to legitimate external interference in climate investments and detach climate financing from global climate justice considerations.

Paper long abstract:

Debt-for-nature swaps are fast becoming an enticing win-win solution to the interlocking biodiversity, climate, and debt crises for global climate and development policymakers. At COP28, leading development banks launched a joint taskforce investigating the feasibility of scaling up ‘sustainability-linked financing’, including debt-for-nature swaps. For their advocates, by conditionalising debt relief on climate and nature-linked investments, debt-for-nature swaps offer a novel way of alleviating debt distress while securing climate action. However, recent debt-for-nature swaps in Belize, Ecuador, and Gabon have been strongly criticised by activists and scholars for delivering minimal debt relief, relying heavily on offshore tax havens, and severely undermining state sovereignty. This paper situates the rise of debt-for-nature swaps amidst a broader historical struggle over sovereign debt governance, specifically the capacity for sovereign creditors to determine and enforce how borrowing states spend debt relief. I contend that advocates of debt-for-nature swaps, particularly in the private consulting and finance sectors, have invoked the globally recognised need for more ambitious climate action to justify the reshaping of sovereign debt governance. I further argue empirically that, by linking long-term climate financing needs to urgent debt crises, recent debt-for-nature swaps have served to decouple the question of ‘who pays’ from global climate justice considerations. Thus, debt-for-nature swaps are fast becoming asset, and indeed sovereignty, fire sales, with decades-long implications for states across the Global South. I conclude by surveying prominent alternative approaches centred on unconditional sovereign debt cancellation and the establishment of an international sovereign bankruptcy mechanism.

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Paper short abstract:

We empirically analyze how Official Development Assistance and Illicit Financial Flows jointly affect the income distribution and inequality in Low- and Middle-Income-Countries and investigate the main moderating factors.

Paper long abstract:

Illicit money involves transnational transactions involving hidden flows, such as phantom investment, that deprive developing countries of domestic resources for development, but also pose a continuing challenge for sustained growth, governance, and effective social justice. This negative influence of illicit money contrasts with the role of foreign aid, which is seen as beneficial to countries in the Global South. However, it is still unclear empirically to what extent the interplay between aid and phantom investment influences income inequality. Moreover, it is yet to be understood how these two financial flows interact with the institutional setting to affect balanced development and inequalities. This is of particular importance, as inequality is strongly related to elite capture, creating a vicious circle of increasing inequalities with rising incomes for a small elite that manages to reap the benefits from illicit money and foreign aid, whereas the rest of the population is left behind or even made worse off. This paper assesses the effects of phantom investment and foreign aid on inequality in the Global South, with a focus on their interaction using a standard two-way fixed-effects model and the System-Generalized Methods of Moments. The results show that phantom investment tend to worsen inequality, especially in countries that depend heavily on foreign aid.

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Paper short abstract:

Poses practical development knowledge on challenges affecting developing countries. Advocating for the need to curb trade misinvoicing in developing countries. To learn a lot from development intellectuals

Paper long abstract:

It is an undeniable fact that Illicit Financial Flows have resulted in underdevelopment in developing Countries. Trade misinvoicing is the main source of illicit financial flows and existing estimates have suggested that developing countries lose hundreds of billions of dollars each year through trade misinvoicing (Spanjers and Salomon, 2017). It has caused financing gaps for developing countries to achieve Sustainable Development Goals.

A report by the African Union and United Nations Economic Commission for Africa 2015 on illicit financial flows reveals that 54 percent (a cumulative total of US$407 billion between 2001 and 2010) of Africa’s illicit financial flows is through trade misinvoicing (Mundenda, 2019, p3).

According to Freitas and Kar (2012), Zambia lost $8.8 billion from 2001-2010 to IFFs due to crime, corruption, and tax evasion. Of that, $4.9 billion can be attributed to trade misinvoicing, which is a type of trade fraud used by commercial importers and exporters around the world (Gascoigne, 2012). This usually takes place through the mines, especially in the mining of copper and the African government has lost revenue. In Zambia, this has had negative effects on economic growth, increased poverty and inequality, poor health and education provision, impediment on the attainment of the SDGs, debt defaulting of $ 6 billion, etc. This has called for concerted efforts to curb trade misinvoicing in Africa to achieve domestic resource mobilization which is needed for development financing to achieve the SDGs.

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Paper short abstract:

I study Botswana’s post-colonial political project. Responding to external, but few domestic, threats this political project simultaneously managed tense geo-political relations and extracted significant tax concessions from De Beers. These dynamics explain both Botswana’s successes and failures.

Paper long abstract:

Much debate has surrounded the categorisation of Botswana’s post-colonial development history and its underlying politics. The contemporary literature is divided, with some presenting Botswana as a growth ‘miracle’, focusing on its high economic growth levels and ‘sound’ macroeconomic management. Critics point to the country’s i) persistently high inequality ii) persistently high unemployment iii) lack of structural transformation and iv) democratic backsliding, all of which are connected to Botswana’s hierarchical and static socio-political order. I contend that this unresolved contradiction exists alongside insufficient exploration of Botswana’s primary historical business-state relationship, with diamond hegemon De Beers, and Botswana’s primary geopolitical relationships, particularly apartheid South Africa. Based on archival work and elite-level interviews, I investigate Botswana’s early post-colonial political project, and provide a coherent political account explaining both Botswana’s successes and failures, while integrating new factors associated with regional white supremacist political projects and South African mining capital. I argue that both sets of Botswana’s outcomes were driven by domestic political elites’, particularly those in the Botswana Democratic Party (BDP), post-colonial political project. This project, responding to significant external threats, from white-minority governments, but few domestic threats, arising from relatively weak non-statist groups, co-evolved alongside diamond mining expansion and state-building. This conservative and elite-led political project effectively managed tense geo-political relations and consistently extracted significant concessions from De Beers, particularly surrounding taxation, explaining its macroeconomic success. However, the same qualities explain why Botswana’s post-colonial political project has not brought about a significant reorientation of the country’s hierarchical relations, explaining many of it’s ‘failures’.

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Paper short abstract:

This paper explores taxation systems' role in fiscal legitimacy, questioning how they privilege some or disproportionately affect others, especially under limited sovereignty, using the Palestinian Authority as a case study.

Paper long abstract:

This paper presents an exploration of the formation of fiscal legitimacy under limited sovereignty, with a specific focus on the Palestinian Authority (PA). Utilising fiscal sociology and theories of governance, it analyses the dynamics that dictate public revenues, taxation, and public service provision in the Occupied Palestinian Territories. The paper highlights the impact of external influences, the proliferation of service providers, and Israeli tax extraction, all of which hinder the PA's ability to establish a robust fiscal contract. Emphasising the complexities of revenue mobilisation under limited sovereignty, this study enhances our understanding of the PA's operations, its interactions with Israeli colonial structures, and the politics of tax mobilisation in contexts where statehood is restricted or non-state actors assume governmental roles. This analysis becomes particularly relevant in the context of declining aid flows and increased pressure on the PA to rely on domestic taxation. The paper lays a valuable foundation for future research on taxation and fiscal governance in territories with constrained sovereignty.

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Paper short abstract:

We use this paper to demonstrate how financialisation in South Africa adversely impacts democratic processes by concentrating the tax burden on fewer tax payers who rely less on social redistribution, thus damaging the social contract. We show the wider impact this damage has on public finances.

Paper long abstract:

There is an emergent literature on the adverse impact that financialisation has on democratic processes. This paper focuses on the consequences of financialisation for taxation and public finances. We bring together literature on the political economy of tax and state financialisation, arguing that financialisation exacerbates trends in modern capitalism which undermine democratic cohesion by delegitimizing taxation and tax collection. South Africa serves as our illustrative case study. The country is one of the most severely financialised societies among its emerging economies (EEs) peers. In line with broader neoliberal trends, company tax has declined severely as source of tax revenue for the state which increasingly has to rely on personal income tax for revenue generation. As consequence of financialisation, the labour market has transformed fundamentally over the past 20 years in the country. The vast majority of jobs is created by the tertiary sector and mainly finance and government employment, while many manufacturing jobs have been lost. This results in income polarization which means that the bulk of the personal income tax take is raised through taxing finance professionals and government employees. These professional groups often opt out of social provision, relying on private health care and pay-for infrastructure, more broadly. As consequence, there is a growing resentment amongst these groups towards taxation, which undermines the ability of the state to provide inclusive social provision.