Resource Flows and Trends in Fragile States

Feb 16, 2014 | OECD
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Aid has declined by 2.4% in 2011 and will continue its downward trend. Meanwhile, the share of the world’s poor found in fragile states is set to rise to a half by 2018; of the seven countries that are unlikely to meet a single MDG, six are fragile.The report reveals that aid remains the largest source of development finance for fragile least-developed countries, while remittances from migrants have outpaced aid in other fragile states. Those transfers could be used better to finance development; this report provides insights on how to do this.The report also finds that fragile states still only collect 14% of their GDP in taxes on average, well below the 20% UN benchmark viewed as the minimum needed to meet development goals. Yet a mere 0.07% of official development assistance (ODA) to fragile states is directed towards building accountable tax systems. The report therefore asks how donors can use their aid to support fragile states in mobilising more domestic revenue, and provides many recent country examples.