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Globalisation and Developing Countries - a Shrinking Tax Base?

  • Joshua Aizenman
  • Yothin Jinjarak

This paper evaluates the impact of globalisation on tax bases of countries at varying stages of development. We see globalisation as a process that induces countries to embrace greater trade and financial integration. This in turn should shift their tax revenue from 'easy to collect' taxes (tariffs and seigniorage) towards 'hard to collect' taxes (value added and income taxes). We find that trade and financial openness have a positive association with the 'hard to collect' taxes, and a negative association with the easy to collect taxes.

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Article provided by Taylor & Francis Journals in its journal Journal of Development Studies.

Volume (Year): 45 (2009)
Issue (Month): 5 ()
Pages: 653-671

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Handle: RePEc:taf:jdevst:v:45:y:2009:i:5:p:653-671
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  1. Friedrich Schneider & Dominik Enste, 2000. "Shadow Economies Around the World; Size, Causes, and Consequences," IMF Working Papers 00/26, International Monetary Fund.
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