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A Note on War and Fiscal Capacity in Developing Countries

Author

Listed:
  • Chowdhury Abdur R.

    (Department of Economics, Marquette University, Milwaukee, WI 53201, USA)

  • Murshed Syed Mansoob

    (Erasmus University - International Institute of Social Studies, Kortenaerkade 12 Den Haag 2518 AX, The Netherlands; and Coventry University, Priory Street, Coventry CV1 5FB, UK)

Abstract

We examine the effect of war on state fiscal capacity in developing countries, measured by tax revenue to GDP ratios. In divided or factionalised societies, patronage may substitute for common interest public goods, with the possibility of violent contestation over a rent. Our dynamic panel empirical estimates of the determinants of fiscal capacity are applied to 79 developing countries, during 1980–2010. Results indicate that war, especially civil war, retards fiscal capacity, along with poor governance, oil dependence and macroeconomic mismanagement.

Suggested Citation

  • Chowdhury Abdur R. & Murshed Syed Mansoob, 2013. "A Note on War and Fiscal Capacity in Developing Countries," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 19(3), pages 431-435, December.
    • Handle: RePEc:bpj:pepspp:v:19:y:2013:i:3:p:431-435:n:2
    DOI: 10.1515/peps-2013-0029
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    References listed on IDEAS

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    1. Lotta Themnér & Peter Wallensteen, 2011. "Armed Conflict, 1946-2010," Journal of Peace Research, Peace Research Institute Oslo, vol. 48(4), pages 525-536, July.
    2. Chowdhury, Abdur & Murshed, Syed Mansoob, 2013. "War and the Fiscal Capacity of the State," Working Papers and Research 2013-03, Marquette University, Center for Global and Economic Studies and Department of Economics.
    3. Alesina, Alberto & Devleeschauwer, Arnaud & Easterly, William & Kurlat, Sergio & Wacziarg, Romain, 2003. "Fractionalization," Journal of Economic Growth, Springer, vol. 8(2), pages 155-194, June.
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