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Taxation and output growth in Africa

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  • Skinner, Jonathon

Abstract

This paper presents a framework for measuring how the structure of taxation and government spending affect output growth. It is shown that when countries are not following a steady-state growth path, static and dynamic distortions will affect output growth. In particular, taxes can affect output by; (1) reducing the marginal productivity of capital and labour, and (2) reducing the supply of capital and labour. The paper indicates that differences in tax policy can explain a substantial degree of variation in output growth among African countries. While measurement error and the potential for excluded variables suggest that the regression results be interpreted cautiously, the results imply that the structure, and not simply the level, of taxation can play an importantrole for encouraging growth in developing countries.

Suggested Citation

  • Skinner, Jonathon, 1988. "Taxation and output growth in Africa," Policy Research Working Paper Series 73, The World Bank.
    • Handle: RePEc:wbk:wbrwps:73
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    References listed on IDEAS

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    Cited by:

    1. Mr. Philip R. Gerson, 1998. "The Impact of Fiscal Policy Variables on Output Growth," IMF Working Papers 1998/001, International Monetary Fund.
    2. Cosimo Magazzino & Marco Mele, 2022. "A Dynamic Factor and Neural Networks Analysis of the Co-movement of Public Revenues in the EMU," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 8(2), pages 289-338, July.
    3. Engen, Eric M. & Skinner, Jonathan, 1996. "Taxation and Economic Growth," National Tax Journal, National Tax Association;National Tax Journal, vol. 49(4), pages 617-642, December.
    4. Emmanuel Atta Anaman & Samuel Gameli Gadzo & John Gartchie Gatsi & Mavis Pobbi, 2017. "Fiscal Aggregates, Government Borrowing and Economic Growth in Ghana An error correction approach," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 7(2), pages 1-5.
    5. Uche Boniface Ugwuanyi & Okelue David Ugwunta, 2017. "Fiscal Policy and Economic Growth: An Examination of Selected Countries in Sub-Saharan Africa," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 7(1), pages 117-130, January.

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