One thing countries can do to raise more money for development is to build their capacity to collect taxes, not from the easy sources of tariffs and licenses, which make the allocation of resources less efficient, but from a broad base of equitable taxation. The tax system should also be set up in ways that do not invite corruption. Worse, the inclination to help developing countries declined in the 1990s. Donors need to provide more aid to poor countries, especially to those that use it effectively. Accelerated debt relief to the most heavily indebted poor countries will help to support national strategies for poverty reduction.
Some regions rely almost entirely on aid for their external finance.
Private capital flows can add much to what countries put into their development efforts. But these flows are concentrated in fewer than 20 developing countries, and some types of these flows, such as bonds and bank lending, can be volatile. Countries need to create the conditions that attract longer term investments from overseas as well as locally. Mozambique and Uganda are beginning to do just that.