Diplomacy & Defense Think Tank News

This paper investigates the impact of aid for trade (AfT) targeted at trade policies on the participation of recipient countries in global value chains (GVCs), and how this impact varies with their prevailing political regimes. In democratic countries, the need for the authorities to account for the interests of various stakeholders (e.g., lobbies, trade unions) can compromise the allocation, use, and effectiveness of AfT. In contrast, less democratic regimes are typically more insulated from political pressures, which may lead to more effective outcomes of aid. At the same time, integration into some complex GVCs requires efficient and democratic institutions, to which these products are sensitive. Employing a sample of 110 countries and data covering 2002-2018, we control for standard determinants of GVC participation, while examining the effect of AfT and the moderating role of the political regime in place. Our estimation addresses the endogeneity of aid through an appropriate instrumentation strategy. Our results suggest that the effect of AfT is mostly positive in autocratic regimes, indicating more effective trade policy reforms. When we account for regional disparities, we find evidence that AfT for trade policy is also impactful in some democratic regimes. This might suggest that the efficacy of AfT is not strictly regime-dependent, but hinges on the government’s commitment to carry out significant reforms leading to greater participation in the global economy.

This paper investigates the impact of aid for trade (AfT) targeted at trade policies on the participation of recipient countries in global value chains (GVCs), and how this impact varies with their prevailing political regimes. In democratic countries, the need for the authorities to account for the interests of various stakeholders (e.g., lobbies, trade unions) can compromise the allocation, use, and effectiveness of AfT. In contrast, less democratic regimes are typically more insulated from political pressures, which may lead to more effective outcomes of aid. At the same time, integration into some complex GVCs requires efficient and democratic institutions, to which these products are sensitive. Employing a sample of 110 countries and data covering 2002-2018, we control for standard determinants of GVC participation, while examining the effect of AfT and the moderating role of the political regime in place. Our estimation addresses the endogeneity of aid through an appropriate instrumentation strategy. Our results suggest that the effect of AfT is mostly positive in autocratic regimes, indicating more effective trade policy reforms. When we account for regional disparities, we find evidence that AfT for trade policy is also impactful in some democratic regimes. This might suggest that the efficacy of AfT is not strictly regime-dependent, but hinges on the government’s commitment to carry out significant reforms leading to greater participation in the global economy.

This paper investigates the impact of aid for trade (AfT) targeted at trade policies on the participation of recipient countries in global value chains (GVCs), and how this impact varies with their prevailing political regimes. In democratic countries, the need for the authorities to account for the interests of various stakeholders (e.g., lobbies, trade unions) can compromise the allocation, use, and effectiveness of AfT. In contrast, less democratic regimes are typically more insulated from political pressures, which may lead to more effective outcomes of aid. At the same time, integration into some complex GVCs requires efficient and democratic institutions, to which these products are sensitive. Employing a sample of 110 countries and data covering 2002-2018, we control for standard determinants of GVC participation, while examining the effect of AfT and the moderating role of the political regime in place. Our estimation addresses the endogeneity of aid through an appropriate instrumentation strategy. Our results suggest that the effect of AfT is mostly positive in autocratic regimes, indicating more effective trade policy reforms. When we account for regional disparities, we find evidence that AfT for trade policy is also impactful in some democratic regimes. This might suggest that the efficacy of AfT is not strictly regime-dependent, but hinges on the government’s commitment to carry out significant reforms leading to greater participation in the global economy.

Many colonies in Africa attained independence through negotiated settlements. However, several others engaged in armed liberation struggles, for example, Kenya, Namibia, South Africa, Southern Rhodesia (Zimbabwe), and the Portuguese colonies of Angola, Cape Verde, Guinea Bissau, Mozambique, and São Tomé and Príncipe. Newly independent states provided liberation movements with bases on their territories and political, military, intellectual, ideological, material, and moral support. In West Africa, Ghana’s first president, Kwame Nkrumah, a notable pan-Africanist, declared in his Independence Day speech in 1957, “Our independence is meaningless unless it is linked up with the total liberation of the African continent.” In East Africa, Julius Nyerere and Jomo Kenyatta, the first presidents of independent Tanzania and Kenya respectively, showed similar commitment to Pan-Africanism and anticolonialism by hosting refugees fleeing armed struggles in Southern Africa. Tanzania hosted the Organization of African Unity Liberation Committee supported anticolonial resistance and liberation movements. President Nyerere supported them for “challenging injustices of empire and apartheid” and declared, “I train freedom fighters”. He encouraged Tanzanians living around liberation movement camps to welcome these movements and their freedom fighters and also protect them from agents of colonial governments. Support also came from many other countries on the continent including Nigeria, Ethiopia, and Algeria. The latter provided sanctuary to representatives of liberation movements such as Nelson Mandela of the African National Congress (ANC) in South Africa.

Many colonies in Africa attained independence through negotiated settlements. However, several others engaged in armed liberation struggles, for example, Kenya, Namibia, South Africa, Southern Rhodesia (Zimbabwe), and the Portuguese colonies of Angola, Cape Verde, Guinea Bissau, Mozambique, and São Tomé and Príncipe. Newly independent states provided liberation movements with bases on their territories and political, military, intellectual, ideological, material, and moral support. In West Africa, Ghana’s first president, Kwame Nkrumah, a notable pan-Africanist, declared in his Independence Day speech in 1957, “Our independence is meaningless unless it is linked up with the total liberation of the African continent.” In East Africa, Julius Nyerere and Jomo Kenyatta, the first presidents of independent Tanzania and Kenya respectively, showed similar commitment to Pan-Africanism and anticolonialism by hosting refugees fleeing armed struggles in Southern Africa. Tanzania hosted the Organization of African Unity Liberation Committee supported anticolonial resistance and liberation movements. President Nyerere supported them for “challenging injustices of empire and apartheid” and declared, “I train freedom fighters”. He encouraged Tanzanians living around liberation movement camps to welcome these movements and their freedom fighters and also protect them from agents of colonial governments. Support also came from many other countries on the continent including Nigeria, Ethiopia, and Algeria. The latter provided sanctuary to representatives of liberation movements such as Nelson Mandela of the African National Congress (ANC) in South Africa.

Many colonies in Africa attained independence through negotiated settlements. However, several others engaged in armed liberation struggles, for example, Kenya, Namibia, South Africa, Southern Rhodesia (Zimbabwe), and the Portuguese colonies of Angola, Cape Verde, Guinea Bissau, Mozambique, and São Tomé and Príncipe. Newly independent states provided liberation movements with bases on their territories and political, military, intellectual, ideological, material, and moral support. In West Africa, Ghana’s first president, Kwame Nkrumah, a notable pan-Africanist, declared in his Independence Day speech in 1957, “Our independence is meaningless unless it is linked up with the total liberation of the African continent.” In East Africa, Julius Nyerere and Jomo Kenyatta, the first presidents of independent Tanzania and Kenya respectively, showed similar commitment to Pan-Africanism and anticolonialism by hosting refugees fleeing armed struggles in Southern Africa. Tanzania hosted the Organization of African Unity Liberation Committee supported anticolonial resistance and liberation movements. President Nyerere supported them for “challenging injustices of empire and apartheid” and declared, “I train freedom fighters”. He encouraged Tanzanians living around liberation movement camps to welcome these movements and their freedom fighters and also protect them from agents of colonial governments. Support also came from many other countries on the continent including Nigeria, Ethiopia, and Algeria. The latter provided sanctuary to representatives of liberation movements such as Nelson Mandela of the African National Congress (ANC) in South Africa.

International donors commit substantial resources to GovTech projects (the application of information and communication technologies to government functions). World Bank GovTech investments alone have exceeded $118 billion over the last three decades. Donor strategy documents consistently frame digital transformation not only as a vehicle for improved effectiveness but also for strengthening democracy.
Autocrats are equally invested in these tools. Globally, at least 88 authoritarian regimes currently operate GovTech projects, and electoral autocracies receive the largest share of GovTech aid (48.6 per cent of commitments). Beyond well-known surveillance applications, autocracies deploy GovTech for service delivery, grievance redress and even citizen engagement. These platforms are deployed to project an image of responsiveness and legitimacy. Our experimental evidence from Turkey shows how efficiency-enhancing GovTech tools, when paired with sophisticated regime communication, can durably entrench autocratic rule. We designed a survey experiment focused on CIMER, Turkey’s widely used citizen petition platform, to examine how citizens respond to the government propaganda surrounding it. The results show that the government’s framing of CIMER as an effective tool that “gets things done” significantly increased trust in authoritarian institutions, even among regime opponents. The effect extended beyond attitudes to behaviour: Asked to allocate a hypothetical donation of money among state institutions, independent non-governmental organisations (NGOs) or themselves, anti-government respondents exposed to messages on the platform were significantly more likely to give the money to state institutions. Our recommendations are as follows:
• Donors must take the second-order effects of GovTech initiatives seriously and develop mechanisms to carefully evaluate the risks of unintended consequences. In many cases, support for GovTech projects is overly optimistic regarding their effects on political openness. Adopting a more context-sensitive and realistic approach demands detailed political economy assessments before supporting GovTech projects and developing monitoring metrics that capture potential regime-legitimation effects.
• Donors need to build stronger safety guardrails into these projects. Depending on the political economy assessments, such measures could include the institutional involvement of international organisations or, if feasible, local NGOs (as conditionality) in platform oversight, mandatory independent audits and open data standards by design, among others.
• Finally, donors need to consider actively participating in public communication on these platforms, with visible donor branding, to counter government-controlled propaganda, claim credit for service delivery and strengthen trust in donor countries and organisations.

International donors commit substantial resources to GovTech projects (the application of information and communication technologies to government functions). World Bank GovTech investments alone have exceeded $118 billion over the last three decades. Donor strategy documents consistently frame digital transformation not only as a vehicle for improved effectiveness but also for strengthening democracy.
Autocrats are equally invested in these tools. Globally, at least 88 authoritarian regimes currently operate GovTech projects, and electoral autocracies receive the largest share of GovTech aid (48.6 per cent of commitments). Beyond well-known surveillance applications, autocracies deploy GovTech for service delivery, grievance redress and even citizen engagement. These platforms are deployed to project an image of responsiveness and legitimacy. Our experimental evidence from Turkey shows how efficiency-enhancing GovTech tools, when paired with sophisticated regime communication, can durably entrench autocratic rule. We designed a survey experiment focused on CIMER, Turkey’s widely used citizen petition platform, to examine how citizens respond to the government propaganda surrounding it. The results show that the government’s framing of CIMER as an effective tool that “gets things done” significantly increased trust in authoritarian institutions, even among regime opponents. The effect extended beyond attitudes to behaviour: Asked to allocate a hypothetical donation of money among state institutions, independent non-governmental organisations (NGOs) or themselves, anti-government respondents exposed to messages on the platform were significantly more likely to give the money to state institutions. Our recommendations are as follows:
• Donors must take the second-order effects of GovTech initiatives seriously and develop mechanisms to carefully evaluate the risks of unintended consequences. In many cases, support for GovTech projects is overly optimistic regarding their effects on political openness. Adopting a more context-sensitive and realistic approach demands detailed political economy assessments before supporting GovTech projects and developing monitoring metrics that capture potential regime-legitimation effects.
• Donors need to build stronger safety guardrails into these projects. Depending on the political economy assessments, such measures could include the institutional involvement of international organisations or, if feasible, local NGOs (as conditionality) in platform oversight, mandatory independent audits and open data standards by design, among others.
• Finally, donors need to consider actively participating in public communication on these platforms, with visible donor branding, to counter government-controlled propaganda, claim credit for service delivery and strengthen trust in donor countries and organisations.

International donors commit substantial resources to GovTech projects (the application of information and communication technologies to government functions). World Bank GovTech investments alone have exceeded $118 billion over the last three decades. Donor strategy documents consistently frame digital transformation not only as a vehicle for improved effectiveness but also for strengthening democracy.
Autocrats are equally invested in these tools. Globally, at least 88 authoritarian regimes currently operate GovTech projects, and electoral autocracies receive the largest share of GovTech aid (48.6 per cent of commitments). Beyond well-known surveillance applications, autocracies deploy GovTech for service delivery, grievance redress and even citizen engagement. These platforms are deployed to project an image of responsiveness and legitimacy. Our experimental evidence from Turkey shows how efficiency-enhancing GovTech tools, when paired with sophisticated regime communication, can durably entrench autocratic rule. We designed a survey experiment focused on CIMER, Turkey’s widely used citizen petition platform, to examine how citizens respond to the government propaganda surrounding it. The results show that the government’s framing of CIMER as an effective tool that “gets things done” significantly increased trust in authoritarian institutions, even among regime opponents. The effect extended beyond attitudes to behaviour: Asked to allocate a hypothetical donation of money among state institutions, independent non-governmental organisations (NGOs) or themselves, anti-government respondents exposed to messages on the platform were significantly more likely to give the money to state institutions. Our recommendations are as follows:
• Donors must take the second-order effects of GovTech initiatives seriously and develop mechanisms to carefully evaluate the risks of unintended consequences. In many cases, support for GovTech projects is overly optimistic regarding their effects on political openness. Adopting a more context-sensitive and realistic approach demands detailed political economy assessments before supporting GovTech projects and developing monitoring metrics that capture potential regime-legitimation effects.
• Donors need to build stronger safety guardrails into these projects. Depending on the political economy assessments, such measures could include the institutional involvement of international organisations or, if feasible, local NGOs (as conditionality) in platform oversight, mandatory independent audits and open data standards by design, among others.
• Finally, donors need to consider actively participating in public communication on these platforms, with visible donor branding, to counter government-controlled propaganda, claim credit for service delivery and strengthen trust in donor countries and organisations.

Policy coherence is widely regarded as essential for achieving sustainable development, climate targets, and reducing inequality, as reflected in the 2030 Agenda for Sustainable Development. Recent scholarship has moved beyond technocratic approaches, drawing on comparative politics, particularly the “3 I's” of ideas, interests, and institutions, to highlight the inherently political nature of coherence. Yet even these studies often treat coherence as binary, easily observable, and intrinsically beneficial. Building on a coherence literature focused on discourses and frames, this paper challenges these assumptions by examining how policy (in)coherence is constructed and contested. Focusing on policy implementation in North Rhine-Westphalia, Germany's coal heartland, we analyse two cases before and during the 2022 energy crisis triggered by the war in Ukraine: the commissioning of the Datteln IV hard coal plant in 2020, and the clearance of the village of Lützerath for mining in 2023. Drawing on 28 semi-structured interviews with German energy, climate, and environmental experts, alongside policy and media analysis, we find that (in)coherence is greatly constructed and contested under shifting political and economic pressures, instrumentalised and legitimisatised by different actors to advance their interests, and profoundly shaped by temporal dynamics. Given recent findings that challenge the 2030 Agenda's assumption that policy coherence reduces inequalities, we also explore how (in)coherence is perceived to shape multidimensional inequality in the Energiewende more broadly. Here, we find that (in)coherence is most prominently perceived to cause delays in climate mitigation, disproportionately affecting youth, low-income households, migrants, and activists. In this context, (in)coherence is not merely technical, political nor constructed, but fundamentally a matter of justice, shifting the analytical focus from whether policies and their implementation are coherent to how, and for whom, coherence matters.

Policy coherence is widely regarded as essential for achieving sustainable development, climate targets, and reducing inequality, as reflected in the 2030 Agenda for Sustainable Development. Recent scholarship has moved beyond technocratic approaches, drawing on comparative politics, particularly the “3 I's” of ideas, interests, and institutions, to highlight the inherently political nature of coherence. Yet even these studies often treat coherence as binary, easily observable, and intrinsically beneficial. Building on a coherence literature focused on discourses and frames, this paper challenges these assumptions by examining how policy (in)coherence is constructed and contested. Focusing on policy implementation in North Rhine-Westphalia, Germany's coal heartland, we analyse two cases before and during the 2022 energy crisis triggered by the war in Ukraine: the commissioning of the Datteln IV hard coal plant in 2020, and the clearance of the village of Lützerath for mining in 2023. Drawing on 28 semi-structured interviews with German energy, climate, and environmental experts, alongside policy and media analysis, we find that (in)coherence is greatly constructed and contested under shifting political and economic pressures, instrumentalised and legitimisatised by different actors to advance their interests, and profoundly shaped by temporal dynamics. Given recent findings that challenge the 2030 Agenda's assumption that policy coherence reduces inequalities, we also explore how (in)coherence is perceived to shape multidimensional inequality in the Energiewende more broadly. Here, we find that (in)coherence is most prominently perceived to cause delays in climate mitigation, disproportionately affecting youth, low-income households, migrants, and activists. In this context, (in)coherence is not merely technical, political nor constructed, but fundamentally a matter of justice, shifting the analytical focus from whether policies and their implementation are coherent to how, and for whom, coherence matters.

Policy coherence is widely regarded as essential for achieving sustainable development, climate targets, and reducing inequality, as reflected in the 2030 Agenda for Sustainable Development. Recent scholarship has moved beyond technocratic approaches, drawing on comparative politics, particularly the “3 I's” of ideas, interests, and institutions, to highlight the inherently political nature of coherence. Yet even these studies often treat coherence as binary, easily observable, and intrinsically beneficial. Building on a coherence literature focused on discourses and frames, this paper challenges these assumptions by examining how policy (in)coherence is constructed and contested. Focusing on policy implementation in North Rhine-Westphalia, Germany's coal heartland, we analyse two cases before and during the 2022 energy crisis triggered by the war in Ukraine: the commissioning of the Datteln IV hard coal plant in 2020, and the clearance of the village of Lützerath for mining in 2023. Drawing on 28 semi-structured interviews with German energy, climate, and environmental experts, alongside policy and media analysis, we find that (in)coherence is greatly constructed and contested under shifting political and economic pressures, instrumentalised and legitimisatised by different actors to advance their interests, and profoundly shaped by temporal dynamics. Given recent findings that challenge the 2030 Agenda's assumption that policy coherence reduces inequalities, we also explore how (in)coherence is perceived to shape multidimensional inequality in the Energiewende more broadly. Here, we find that (in)coherence is most prominently perceived to cause delays in climate mitigation, disproportionately affecting youth, low-income households, migrants, and activists. In this context, (in)coherence is not merely technical, political nor constructed, but fundamentally a matter of justice, shifting the analytical focus from whether policies and their implementation are coherent to how, and for whom, coherence matters.

Deutschlands Industrie schwächelt seit 2015 bei hochwertigen Technologiegütern und Spitzentechnologie – Anteile an Wertschöpfung und Welthandel sinken, Produktivität schwächelt – Politischer Handlungsbedarf bei Regulierungsdichte, öffentlicher Verwaltung und europäischem Binnenmarkt Deutsche ...

Tax expenditures (TEs) in Zimbabwe represent a significant portion of government spending, amounting to 2.8 percent of GDP, 24.7 percent of total revenue, and 21.2 percent of public spending in 2023. Companies benefitting from TEs enjoy tax savings that trigger a reduction in government revenue, which may in turn result in higher budget deficits and sovereign debt. TEs are often regressive, e.g., when TEs related to personal income tax (PIT) benefit those in higher income tax brackets more, and TEs related to value-added tax (VAT) provide a larger benefit to higher income households, given their larger consumption in absolute terms. Although TEs are meant to boost investment, exports, innovation and employment, their real impact is often unknown, as Zimbabwe lacks a culture of ex-ante and ex-post evaluation of TEs.

Transparency: Section 3 of the Public Finance Management Act [Chapter 22:19] aims to secure transparency, accountability and sound management of revenues and expenditure, but does not provide specific provisions on TEs assessments nor reporting to the Parliament of Zimbabwe. Section 30 of the Zimbabwe Investment Development Agency (ZIDA) Act also highlights that ZIDA, in consultation with the Minister responsible for Finance, should publish guidelines for investment, which include general and special incentives applicable to specific categories of licensed investors. Against this backdrop, it is fair to say that there is no explicit policy on TE transparency in Zimbabwe.

Complex landscape: The rationale for the introduction of business-related TEs is to stimulate investment and production, which should then create employment opportunities and other benefits, potentially leading to higher government revenues in the medium or long term. If well-designed, tax incentives for investment can be a cost-effective policy tool. However, TEs may be vulnerable to lobbying and abuse, providing preferential tax treatment to specific groups with vested interests to keep the incentives in place even without much benefit to the economy at large. Empirical evidence on TEs is still limited in Zimbabwe, which undermines evidence-based tax policymaking.

Evaluation challenges: The government of Zimbabwe committed to develop a tax incentive monitoring and evaluation framework, managed by the Zimbabwe Revenue Authority (ZIMRA), to facilitate the management of TEs and inform cost-benefit analyses by Treasury on an annual basis with effect from 1 January 2019. No ex-ante evaluation has been conducted so far, but some ex-post evaluations of TEs were undertaken in 2021 and 2023. In addition, ZIMRA has started to publish TE figures from 2019 onwards in its annual reports, although the statistics published are highly aggregated and do not cover all taxes upon which TEs are granted. The published TEs from the annual reports are revenue forgone from domestic and trade taxes. Although the Parliament of Zimbabwe has the competence to oversee the national budget cycle, it is currently not involved in the monitoring and control of TEs.

Fiscal sustainability: Fiscal sustainability enables governments to meet future public expenditure and financial obligations without resorting to excessive borrowing. Constitution of Zimbabwe Amendment (No. 20) Act, 2013 (Act No. 1 of 2013, Section 299) provides for Parliamentary oversight of state revenues and expenditure to ensure accountability, monitoring and fiscal sustainability (Government of Zimbabwe, 2023a). Section 298 (1) b i of the Constitution states that the burden of taxation must be shared equally which implies that TEs should not be allocated without evaluating if they are beneficial to Zimbabwe. TEs can be described as hidden government spending, which can negatively affect fiscal sustainability. Zimbabwe’s TEs amounted to US$1.34 billion in 2023, which is about 2.8 percent of GDP, compared to the global average of about 4 percent of GDP. However, VAT rate reductions and exemptions on domestic sales, which constituted 51 percent and 27.1 percent of total TEs reported by ZIMRA in 2020, were not reported through the new Tax and Revenue Management System (TaRMS) in 2023. Moreover, TEs for CIT, PIT and excise duty were not reported since they are not captured by ZIMRA. The bulk of the reported figures for 2023 were TEs related to custom duties. Thus, the extent of TE use in Zimbabwe is underreported and may in fact be considerably higher than the global average. Moreover, this is happening at a time when Zimbabwe is facing limited fiscal space, with public debt constituting 59.7 percent of GDP in 2024.

Policy recommendations: The Government of Zimbabwe should conduct or commission ex-ante and ex-post evaluations of TEs to enhance their effectiveness. Statistics on TE use and revenue forgone should be publicly available and easily accessible to enhance transparency and access of information to the users. All TEs should be time-bound (with sunset clauses) and, ideally, only be renewed after an assessment has been undertaken to justify their existence. All new TEs should be subject to an ex-ante evaluation to clarify expectations and ensure that only effective TEs are implemented in the country. The Parliament of Zimbabwe should be involved in the monitoring and control of TEs. The legislation should ensure that TE proposals are in line with national development plans and policies. The Parliament of Zimbabwe should also ensure that TE reports are published at pre-defined dates. TE reporting should be comprehensive, reported annually. This means there should be a designated authority responsible for preparing the TE report, preferably in the Ministry of Finance, Economic Development and Investment Promotion. The legal framework should also establish the structure and frequency of TE evaluations, including both ex-ante assessments and ex-post evaluations.

Tax expenditures (TEs) in Zimbabwe represent a significant portion of government spending, amounting to 2.8 percent of GDP, 24.7 percent of total revenue, and 21.2 percent of public spending in 2023. Companies benefitting from TEs enjoy tax savings that trigger a reduction in government revenue, which may in turn result in higher budget deficits and sovereign debt. TEs are often regressive, e.g., when TEs related to personal income tax (PIT) benefit those in higher income tax brackets more, and TEs related to value-added tax (VAT) provide a larger benefit to higher income households, given their larger consumption in absolute terms. Although TEs are meant to boost investment, exports, innovation and employment, their real impact is often unknown, as Zimbabwe lacks a culture of ex-ante and ex-post evaluation of TEs.

Transparency: Section 3 of the Public Finance Management Act [Chapter 22:19] aims to secure transparency, accountability and sound management of revenues and expenditure, but does not provide specific provisions on TEs assessments nor reporting to the Parliament of Zimbabwe. Section 30 of the Zimbabwe Investment Development Agency (ZIDA) Act also highlights that ZIDA, in consultation with the Minister responsible for Finance, should publish guidelines for investment, which include general and special incentives applicable to specific categories of licensed investors. Against this backdrop, it is fair to say that there is no explicit policy on TE transparency in Zimbabwe.

Complex landscape: The rationale for the introduction of business-related TEs is to stimulate investment and production, which should then create employment opportunities and other benefits, potentially leading to higher government revenues in the medium or long term. If well-designed, tax incentives for investment can be a cost-effective policy tool. However, TEs may be vulnerable to lobbying and abuse, providing preferential tax treatment to specific groups with vested interests to keep the incentives in place even without much benefit to the economy at large. Empirical evidence on TEs is still limited in Zimbabwe, which undermines evidence-based tax policymaking.

Evaluation challenges: The government of Zimbabwe committed to develop a tax incentive monitoring and evaluation framework, managed by the Zimbabwe Revenue Authority (ZIMRA), to facilitate the management of TEs and inform cost-benefit analyses by Treasury on an annual basis with effect from 1 January 2019. No ex-ante evaluation has been conducted so far, but some ex-post evaluations of TEs were undertaken in 2021 and 2023. In addition, ZIMRA has started to publish TE figures from 2019 onwards in its annual reports, although the statistics published are highly aggregated and do not cover all taxes upon which TEs are granted. The published TEs from the annual reports are revenue forgone from domestic and trade taxes. Although the Parliament of Zimbabwe has the competence to oversee the national budget cycle, it is currently not involved in the monitoring and control of TEs.

Fiscal sustainability: Fiscal sustainability enables governments to meet future public expenditure and financial obligations without resorting to excessive borrowing. Constitution of Zimbabwe Amendment (No. 20) Act, 2013 (Act No. 1 of 2013, Section 299) provides for Parliamentary oversight of state revenues and expenditure to ensure accountability, monitoring and fiscal sustainability (Government of Zimbabwe, 2023a). Section 298 (1) b i of the Constitution states that the burden of taxation must be shared equally which implies that TEs should not be allocated without evaluating if they are beneficial to Zimbabwe. TEs can be described as hidden government spending, which can negatively affect fiscal sustainability. Zimbabwe’s TEs amounted to US$1.34 billion in 2023, which is about 2.8 percent of GDP, compared to the global average of about 4 percent of GDP. However, VAT rate reductions and exemptions on domestic sales, which constituted 51 percent and 27.1 percent of total TEs reported by ZIMRA in 2020, were not reported through the new Tax and Revenue Management System (TaRMS) in 2023. Moreover, TEs for CIT, PIT and excise duty were not reported since they are not captured by ZIMRA. The bulk of the reported figures for 2023 were TEs related to custom duties. Thus, the extent of TE use in Zimbabwe is underreported and may in fact be considerably higher than the global average. Moreover, this is happening at a time when Zimbabwe is facing limited fiscal space, with public debt constituting 59.7 percent of GDP in 2024.

Policy recommendations: The Government of Zimbabwe should conduct or commission ex-ante and ex-post evaluations of TEs to enhance their effectiveness. Statistics on TE use and revenue forgone should be publicly available and easily accessible to enhance transparency and access of information to the users. All TEs should be time-bound (with sunset clauses) and, ideally, only be renewed after an assessment has been undertaken to justify their existence. All new TEs should be subject to an ex-ante evaluation to clarify expectations and ensure that only effective TEs are implemented in the country. The Parliament of Zimbabwe should be involved in the monitoring and control of TEs. The legislation should ensure that TE proposals are in line with national development plans and policies. The Parliament of Zimbabwe should also ensure that TE reports are published at pre-defined dates. TE reporting should be comprehensive, reported annually. This means there should be a designated authority responsible for preparing the TE report, preferably in the Ministry of Finance, Economic Development and Investment Promotion. The legal framework should also establish the structure and frequency of TE evaluations, including both ex-ante assessments and ex-post evaluations.

Tax expenditures (TEs) in Zimbabwe represent a significant portion of government spending, amounting to 2.8 percent of GDP, 24.7 percent of total revenue, and 21.2 percent of public spending in 2023. Companies benefitting from TEs enjoy tax savings that trigger a reduction in government revenue, which may in turn result in higher budget deficits and sovereign debt. TEs are often regressive, e.g., when TEs related to personal income tax (PIT) benefit those in higher income tax brackets more, and TEs related to value-added tax (VAT) provide a larger benefit to higher income households, given their larger consumption in absolute terms. Although TEs are meant to boost investment, exports, innovation and employment, their real impact is often unknown, as Zimbabwe lacks a culture of ex-ante and ex-post evaluation of TEs.

Transparency: Section 3 of the Public Finance Management Act [Chapter 22:19] aims to secure transparency, accountability and sound management of revenues and expenditure, but does not provide specific provisions on TEs assessments nor reporting to the Parliament of Zimbabwe. Section 30 of the Zimbabwe Investment Development Agency (ZIDA) Act also highlights that ZIDA, in consultation with the Minister responsible for Finance, should publish guidelines for investment, which include general and special incentives applicable to specific categories of licensed investors. Against this backdrop, it is fair to say that there is no explicit policy on TE transparency in Zimbabwe.

Complex landscape: The rationale for the introduction of business-related TEs is to stimulate investment and production, which should then create employment opportunities and other benefits, potentially leading to higher government revenues in the medium or long term. If well-designed, tax incentives for investment can be a cost-effective policy tool. However, TEs may be vulnerable to lobbying and abuse, providing preferential tax treatment to specific groups with vested interests to keep the incentives in place even without much benefit to the economy at large. Empirical evidence on TEs is still limited in Zimbabwe, which undermines evidence-based tax policymaking.

Evaluation challenges: The government of Zimbabwe committed to develop a tax incentive monitoring and evaluation framework, managed by the Zimbabwe Revenue Authority (ZIMRA), to facilitate the management of TEs and inform cost-benefit analyses by Treasury on an annual basis with effect from 1 January 2019. No ex-ante evaluation has been conducted so far, but some ex-post evaluations of TEs were undertaken in 2021 and 2023. In addition, ZIMRA has started to publish TE figures from 2019 onwards in its annual reports, although the statistics published are highly aggregated and do not cover all taxes upon which TEs are granted. The published TEs from the annual reports are revenue forgone from domestic and trade taxes. Although the Parliament of Zimbabwe has the competence to oversee the national budget cycle, it is currently not involved in the monitoring and control of TEs.

Fiscal sustainability: Fiscal sustainability enables governments to meet future public expenditure and financial obligations without resorting to excessive borrowing. Constitution of Zimbabwe Amendment (No. 20) Act, 2013 (Act No. 1 of 2013, Section 299) provides for Parliamentary oversight of state revenues and expenditure to ensure accountability, monitoring and fiscal sustainability (Government of Zimbabwe, 2023a). Section 298 (1) b i of the Constitution states that the burden of taxation must be shared equally which implies that TEs should not be allocated without evaluating if they are beneficial to Zimbabwe. TEs can be described as hidden government spending, which can negatively affect fiscal sustainability. Zimbabwe’s TEs amounted to US$1.34 billion in 2023, which is about 2.8 percent of GDP, compared to the global average of about 4 percent of GDP. However, VAT rate reductions and exemptions on domestic sales, which constituted 51 percent and 27.1 percent of total TEs reported by ZIMRA in 2020, were not reported through the new Tax and Revenue Management System (TaRMS) in 2023. Moreover, TEs for CIT, PIT and excise duty were not reported since they are not captured by ZIMRA. The bulk of the reported figures for 2023 were TEs related to custom duties. Thus, the extent of TE use in Zimbabwe is underreported and may in fact be considerably higher than the global average. Moreover, this is happening at a time when Zimbabwe is facing limited fiscal space, with public debt constituting 59.7 percent of GDP in 2024.

Policy recommendations: The Government of Zimbabwe should conduct or commission ex-ante and ex-post evaluations of TEs to enhance their effectiveness. Statistics on TE use and revenue forgone should be publicly available and easily accessible to enhance transparency and access of information to the users. All TEs should be time-bound (with sunset clauses) and, ideally, only be renewed after an assessment has been undertaken to justify their existence. All new TEs should be subject to an ex-ante evaluation to clarify expectations and ensure that only effective TEs are implemented in the country. The Parliament of Zimbabwe should be involved in the monitoring and control of TEs. The legislation should ensure that TE proposals are in line with national development plans and policies. The Parliament of Zimbabwe should also ensure that TE reports are published at pre-defined dates. TE reporting should be comprehensive, reported annually. This means there should be a designated authority responsible for preparing the TE report, preferably in the Ministry of Finance, Economic Development and Investment Promotion. The legal framework should also establish the structure and frequency of TE evaluations, including both ex-ante assessments and ex-post evaluations.

The OECD Conference on the Future of International Development Co-operation convened in Paris on 11-12 May 2026. Andy Sumner and Stephan Klingebiel consider one core idea arising.

The OECD Conference on the Future of International Development Co-operation convened in Paris on 11-12 May 2026. Andy Sumner and Stephan Klingebiel consider one core idea arising.

The OECD Conference on the Future of International Development Co-operation convened in Paris on 11-12 May 2026. Andy Sumner and Stephan Klingebiel consider one core idea arising.

This study examines the synergistic effects of digital and green economies on sustainable development in 35 Sub-Saharan African (SSA) countries over the period 2010–2021. Using a two-step System GMM estimator, we analyze the interaction among digital technology index (DT), green total factor productivity (GP), and adjusted net savings (ANS) as a percentage of GNI. The baseline results reveal a negative association between DT and ANS at low levels of green productivity. However, this penalty is mitigated as green productivity rises indicating a synergistic effect. Robustness checks across income levels, regions, and infrastructure types uncover heterogeneities. Specifically, the marginal penalty associated with fixed broadband subscription improves by 0.41% point as economies move from the 25th to the 50th percentile of green productivity, and by a larger 0.828% points when moving from the 25th to the 75th percentile. While basic mobile connectivity remains sustainability-neutral, high-capacity fixed broadband requires environmental efficiency to avoid eroding national savings. Furthermore, digitalization attenuates the negative relationship between natural resource rents and ANS. These findings underscore that achieving sustainable development in SSA requires synchronized policy strategies rather than isolated investments in technology or green initiatives.