Domestic resource mobilization and external financing: When does governance matter?

by: Amadou Sy and Mariama Sow Wednesday, December 21, 2016

This paper studies the relationship between two global priorities: financing for development and good governance. The Addis Ababa Action Agenda of the Third International Conference on Financing for Development identifies domestic revenue mobilization as central to achieving the Sustainable Development Goals (SDGs). The Action Agenda also recognizes the importance of international finance in the development process (United Nations, 2015). At the same time, the process leading to the SDGs has emphasized good governance as a development priority. One of the SDGs (Goal 16) is solely dedicated to the “[promotion] of peaceful and inclusive societies for sustainable development, [the provision] of access to justice for all and [building] effective, accountable and inclusive institutions at all levels.”

But does “good governance” really matter for mobilizing financing for development? And if so, do different financing sources respond equally to good governance? In particular, do domestic financing sources respond to good governance in the same way as external financing sources?

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