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Natural resource endowments and the domestic revenue effort

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  • Bornhorst, Fabian
  • Gupta, Sanjeev
  • Thornton, John

Abstract

We examine whether there is evidence of an offset between government revenues from hydrocarbon (oil and gas) related activities and revenues from other domestic sources in a panel of 30 hydrocarbon producing countries. Our main finding is that there is an offset of about 20%, which is robust to the inclusion of control variables, the exclusion of outliers, and alternate estimation methodologies. While the impact of the offset on long-term development prospects is not clear, there is a risk of significant adjustment costs in moving to a higher level of domestic taxation once natural resources are depleted.

Suggested Citation

  • Bornhorst, Fabian & Gupta, Sanjeev & Thornton, John, 2009. "Natural resource endowments and the domestic revenue effort," European Journal of Political Economy, Elsevier, vol. 25(4), pages 439-446, December.
    • Handle: RePEc:eee:poleco:v:25:y:2009:i:4:p:439-446
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