Taxation, Political Accountability, and Foreign Aid: Lessons from Somaliland

[Jacaylbaro]

In recent years, the importance of good governance to economic and social development has

become widely accepted. Yet our understanding of the factors that foster political accountability

and good governance remains limited. So over the past decade, a growing number of academics

have turned to studies of state formation in early Europe in search of clues to better understand

what gives rise to accountable and representative governments. This move has given birth to

modern research into the connection between taxation and political accountability

 

Somaliland also offers a unique opportunity to expand our understanding of the possible effects

of foreign assistance on revenue bargaining. By comparing normal levels of foreign assistance in

sub-Saharan Africa with the size of revenues that were involved in bargaining in Somaliland, this

analysis provides some of the most direct evidence to date of the potential impact of normal

levels of foreign assistance to disrupt the revenue bargaining process.

 

This paper is based on an extensive review of existing literature on Somaliland's political

development. It draws heavily upon a number of sources, including (among others) reporting by

the International Crisis Group, the War-torn Societies Project and the Academy of Peace and Development, and most of all the exceptional research and personal accounts of Mark Bradbury.

 

It is divided into three parts. In Part One, it presents a brief overview of Somaliland and its

development for those unfamiliar with the country. In Part Two, it details the role of revenue

bargaining in the development of accountable and representative institutions in Somaliland and

explores some of the other factors that helped facilitated this process. And in Part Three, it

explores how the revenue bargaining process detailed in Part Two may have been affected had

Somaliland been eligible for normal levels of foreign assistance.

[Jacaylbaro]

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