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Innovative approaches to domestic resource mobilization in selected LDCs

CDP Background Paper No. 6
Department of Economic & Social Affairs
Samuel Wangwe and Prosper Charle

5 avril 2019

Mobilization of domestic resources in recognized as the foundation for self-sustaining development. Domestic resources are important in financing domestic investment and social programmes, which are essential for economic growth and for eradicating poverty. Financing for economic growth and poverty reduction is one of the challenges facing the least developed countries (LDCs).

Due to inability of domestic resource to meet the financing requirements, these countries have resorted to external sources to finance development projects and social programs. However, domestic resource mobilization can be managed more innovatively for greater effectiveness. In this context, a sound fiscal policy, responsible social spending and a well functioning and competitive financial system are the crucial elements for economic and social development.

This paper examines innovative approaches to domestic resource mobilization in selected Least Developed Countries. It covers various aspects of domestic resource mobilization with focus on the linkages to poverty reduction and growth. The areas addressed in this paper include : financial sector reform policies for growth and poverty reduction, Microfinancing, taxation for growth and poverty reduction, management of domestic debt, government spending targeted to crowd in private savings and investment (including public-private partnerships), and mobilization of private capita, including reversal of capital flight and more innovative and active participation in the international trade.

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