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Corruption and Tax Burden: What Is the Joint Effect on Total Factor Productivity?

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  • Kouramoudou Kéïta

    (Faculté des Sciences Economiques et de Gestion de l’Université de Kindia, Kindia BP:212, Guinea
    Mission d’Appui à la Mobilisation des Ressources Internes (MAMRI), Primature, Sandervalia, 6ème Avenue de la République, Kaloum, Conakry BP:359, Guinea)

  • Hannu Laurila

    (Faculty of Management and Business, Tampere University, FI-33014 Kalevantie, Finland)

Abstract

A common conclusion in the literature is that both corruption and taxation hamper economic growth. It is also plausible that both affect total factor productivity, which, by the famous Solow residual, is a vital driver of economic progress. Moreover, corruption and tax burden are supposed to be intertwined. This paper focuses on the supposedly linked effects of corruption and tax burden on total factor productivity. The empirical study uses panel data from 90 countries for the time span of 1996–2014. The results show that both corruption and tax burden deteriorate total factor productivity, but that an increase in tax burden mitigates the negative effect of corruption.

Suggested Citation

  • Kouramoudou Kéïta & Hannu Laurila, 2021. "Corruption and Tax Burden: What Is the Joint Effect on Total Factor Productivity?," Economies, MDPI, vol. 9(1), pages 1-16, March.
    • Handle: RePEc:gam:jecomi:v:9:y:2021:i:1:p:26-:d:508301
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