Economic Development in Africa 2007

Reclaiming Policy Space - Domestic Resource Mobilization and Developmental States

image of Economic Development in Africa 2007

The 2007 Report examines domestic resource mobilization for growth and poverty reduction in African countries. It analyses how African countries can increase domestic resources and channel them into productive investments. The Report also examines how African countries can reclaim development “policy space”, and give true meaning to, “ownership” of development strategies that respond to their own priorities within the framework of a “developmental State”.

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Domestic resource mobilization: Issues at stake

Low levels of domestic resource mobilization are believed to be caused by low levels of income, demographic factors and the structure of financial markets, which are generally difficult to influence in the short to medium term. It has often been assumed, therefore, that it is unrealistic to expect a large and sustained increase in domestic resource mobilization in Africa. As a result, increasing domestic resource mobilization has been described as the “hard option” for closing Africa’s resource gap (Aryeetey, 2004). Discussions on how to fill the resource gap have consequently tended to focus heavily on the increase of external flows such as ODA and FDI, as well as on debt reduction.


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