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The Illusory Leader: Natural Resources, Taxation and Accountability

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  • Eoin F. McGuirk

    ()
    (Institute for International Integration Studies, Trinity College Dublin)

  • Eoin F. McGuirk

Abstract

This paper proposes and tests a mechanism through which the natural resource curse can operate. I posit that, in the presence of high natural resource rents, leaders lower the burden of taxation on citizens in order to reduce the demand for democratic accountability. The theory is tested using micro-level data from public opinion surveys across 15 sub-Saharan countries, in addition to country-level data on natural resource rents, taxation and election proximity. It is found that an increase in natural resource rents decreases perceived tax enforcement, which in turn reduces the demand for regular, open and honest elections. Results are robust to alternative specifications. A supplementary analysis reveals that, consistent with the two-period model proposed, the effects are more acute closer to national elections. The findings support political-economy explanations of how natural resources affect economies, in which resource rents are purported to influence the decisions of the political elite through increased returns to staying in power.

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Bibliographic Info

Paper provided by IIIS in its series The Institute for International Integration Studies Discussion Paper Series with number iiisdp327.

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Length: 31 pages
Date of creation: May 2010
Date of revision:
Handle: RePEc:iis:dispap:iiisdp327

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Keywords: Democracy; Political Economy; Natural Resources; Curses; Africa;

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Cited by:
  1. Baskaran, Thushyanthan, 2014. "Taxation and Democratization," World Development, Elsevier, vol. 56(C), pages 287-301.
  2. Ernesto Crivelli & Sanjeev Gupta, 2014. "Resource Blessing, Revenue Curse? Domestic Revenue Effort in Resource-Rich Countries," IMF Working Papers 14/5, International Monetary Fund.
  3. Alexander James, 2013. "US State Fiscal Policy and Natural Resources," Economics Series Working Papers OxCarre Research Paper 12, University of Oxford, Department of Economics.
  4. Pedro L. Rodríguez, José R. Morales, Fancisco J. Monaldi, 2012. "Direct Distribution of Oil Revenues in Venezuela: A Viable Alternative?," Working Papers 306, Center for Global Development.

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