The Political Economy of Imperfect Taxation and Sustainable Privatisation : When do Countries Privatise, and Who Gets the Spoils?
This article investigates the connection between the apparently uncorrelated issues of tax evasion and privatisation. We first determine how the political process - given a country's level of development and income distribution- will determine the efficiency of its tax system. We then regard how the efficiency of taxation impacts on the outcome of privatisation attempts. We consider under which condition privatisation will proceed, and who will be the political supporters as well as the main winners of the privatisation process. Moreover we investigate the impact of different forms of corruption both on the initial public support for privatisation, as well as its long term political sustainability.
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