Bargaining for Fiscal Control: Tax Federalism in Brazil and Mexico, 1870-1940
This paper studies the historical origins of the federalist institutions in Mexico and Brazil. Using a bargaining game model, I argue that the type of commodities each country produced by the end of the nineteenth Century determined the negotiation power of local governments. This led to the buildup of opposite federalist institutions in both countries, which have persisted until nowadays. The model shows that countries with regions with more autonomy to produce and trade their commodities increase the local power to collect more taxes. While in Brazil coffee was the most important commodity, Mexico relied on mining products. Coffee was produced by local landowners who became economically powerful and they were able that export taxes were collected locally with the proclamation of the 1891 Constitution. Empirical estimates show that, after 1891, exporter states increased significantly their own fiscal revenue. On the other hand, mining was capital and technology intensive, inputs that were domestically scarce in Mexico. To finance those activities foreign investment was promoted centrally, weakening the relative power of local elites.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Daron Acemoglu & Simon Johnson & James A. Robinson, 2001.
"The Colonial Origins of Comparative Development: An Empirical Investigation,"
American Economic Review,
American Economic Association, vol. 91(5), pages 1369-1401, December.
- Daron Acemoglu & Simon Johnson & James A. Robinson, 2000. "The Colonial Origins of Comparative Development: An Empirical Investigation," NBER Working Papers 7771, National Bureau of Economic Research, Inc.
- Richard M. Bird & Jorge Martinez-Vazquez & Benno Torgler, 2014.
"Societal Institutions and Tax Effort in Developing Countries,"
Annals of Economics and Finance,
Society for AEF, vol. 15(1), pages 301-351, May.
- Richard M. Bird & Jorge Martinez-Vazquez & Benno Torgler, 2004. "Societal Institutions and Tax Effort in Developing Countries," CREMA Working Paper Series 2004-21, Center for Research in Economics, Management and the Arts (CREMA).
- Richard M. Bird & Jorge Martinez-Vazquez & Benno Torgler, 2008. "Societal Institutions and Tax Effort in Developing Countries," CEMA Working Papers 582, China Economics and Management Academy, Central University of Finance and Economics.
- Richard M. Bird & Jorge Martinez-Vazquez & Benno Torgler, 2004. "Societal Institutions and Tax Effort in Developing Countries," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0406, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
- Andrei Shleifer & Robert W. Vishny, 1998.
"The Quality of Government,"
Harvard Institute of Economic Research Working Papers
1847, Harvard - Institute of Economic Research.
- Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert Vishny, 1998. "The Quality of Goverment," NBER Working Papers 6727, National Bureau of Economic Research, Inc.
- Rafael LaPorta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert Vishny, . "The Quality of Government," Working Paper 19452, Harvard University OpenScholar.
- Arzaghi, Mohammad & Henderson, J. Vernon, 2005. "Why countries are fiscally decentralizing," Journal of Public Economics, Elsevier, vol. 89(7), pages 1157-1189, July.
- Friedrich Schneider & Dominik Enste, 2000.
"Shadow Economies Around the World: Size, Causes, and Consequences,"
IMF Working Papers
00/26, International Monetary Fund.
- Friedrich Schneider & Dominik Enste, 1999. "Shadow Economies Around the World - Size, Causes, and Consequences," CESifo Working Paper Series 196, CESifo Group Munich.
- Dominik H. Enste & Friedrich Schneider, 2000. "Shadow Economies: Size, Causes, and Consequences," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 77-114, March.
- repec:ttp:itpwps:0411 is not listed on IDEAS
When requesting a correction, please mention this item's handle: RePEc:bdm:wpaper:2011-06. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dirección de Sistemas)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.