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Analysis of Revenue Potential and Revenue Effort in Developing Asian Countries

Listed author(s):
  • Attiya Y. Javid

    (Pakistan Institute of Development Economics, Islamabad.)

  • Umaima Arif

    (Economics Department, Quaid-i-Azam University, Islamabad.)

This study analyses fiscal performance across developing Asian countries over the period 1984 to 2010. The results indicate that per capita GDP, agriculture value addition, trade openness, debt and population growth are significant determinants of revenue to GDP ratio across countries. Among the institutional factors, control of corruption, law and order and bureaucracy quality has a significantly positive effect on revenue performance. The fiscal effort indices obtained for Asian countries show that while several ASEAN countries are performing well above their potential, some South Asian economies fall short of their revenue potential. An overall decline in revenue effort is found in nineties, however in eighties and again in twenties there is improvement in revenue performance. The results suggest that there is need of good policy measures such as broadening the tax base and improving the institutional quality to address this issue. The architect of revenue reforms must be country specific that requires broad investigation of the country’s revenue capacity, revenue performance, and institutional structure.

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File URL: http://www.pide.org.pk/pdf/PDR/2012/Volume4/365-380.pdf
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Article provided by Pakistan Institute of Development Economics in its journal The Pakistan Development Review.

Volume (Year): 51 (2012)
Issue (Month): 4 ()
Pages: 365-380

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Handle: RePEc:pid:journl:v:51:y:2012:i:4:p:365-380
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  1. David A. Grigorian & Hamid R Davoodi, 2007. "Tax Potential vs. Tax Effort; A Cross-Country Analysis of Armenia's Stubbornly Low Tax Collection," IMF Working Papers 07/106, International Monetary Fund.
  2. Bird,Richard & Gendron,Pierre-Pascal, 2011. "The VAT in Developing and Transitional Countries," Cambridge Books, Cambridge University Press, number 9781107401440, December.
  3. Agbeyegbe, Terence D. & Stotsky, Janet & WoldeMariam, Asegedech, 2006. "Trade liberalization, exchange rate changes, and tax revenue in Sub-Saharan Africa," Journal of Asian Economics, Elsevier, vol. 17(2), pages 261-284, April.
  4. Tehmina S. Khan & John Norregaard, 2007. "Tax Policy; Recent Trends and Coming Challenges," IMF Working Papers 07/274, International Monetary Fund.
  5. Joshua Aizenman & Yothin Jinjarak, 2009. "Globalisation and Developing Countries - a Shrinking Tax Base?," Journal of Development Studies, Taylor & Francis Journals, vol. 45(5), pages 653-671.
  6. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
  7. Dhaneshwar Ghura, 1998. "Tax Revenue in Sub-Saharan Africa; Effects of Economic Policies and Corruption," IMF Working Papers 98/135, International Monetary Fund.
  8. Terence D Agbeyegbe & Janet Gale Stotsky & Asegedech WoldeMariam, 2004. "Trade Liberalization, Exchange Rate Changes, and Tax Revenue in Sub-Saharan Africa," IMF Working Papers 04/178, International Monetary Fund.
  9. Le, Tuan Minh & Moreno-Dodson, Blanca & Rojchaichaninthorn, Jeep, 2008. "Expanding taxable capacity and reaching revenue potential : cross-country analysis," Policy Research Working Paper Series 4559, The World Bank.
  10. Joweria M. Teera & John Hudson, 2004. "Tax performance: a comparative study," Journal of International Development, John Wiley & Sons, Ltd., vol. 16(6), pages 785-802.
  11. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
  12. Abhijit Sen Gupta, 2007. "Determinants of Tax Revenue Efforts in Developing Countries," IMF Working Papers 07/184, International Monetary Fund.
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