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Revisiting the Relationship between Trade Liberalization and Taxation

Author

Listed:
  • Grégoire Rota-Graziosi

    (CERDI - Centre d'Études et de Recherches sur le Développement International - IRD - Institut de Recherche pour le Développement - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne)

  • Rabah Arezki

    (CERDI - Centre d'Études et de Recherches sur le Développement International - IRD - Institut de Recherche pour le Développement - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne)

  • Alou Adessé Dama

    (CERDI - Centre d'Études et de Recherches sur le Développement International - IRD - Institut de Recherche pour le Développement - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne)

Abstract

This paper explores the dynamic effects of trade liberalization on tax revenue using a worldwide panel dataset. Results point to statistically significant negative effect of liberalizationon (non-resource) tax revenues in the short term and no significant effect in the medium term. Liberalization also alter the tax structure tilting revenues toward indirect taxes away from direct ones. Economies which have implemented value added taxes prior to liberalization have mitigated its negative effects on tax revenues.The evidence is supportiveof the complementarity role of state capacity to reap the benefits of liberalization.

Suggested Citation

  • Grégoire Rota-Graziosi & Rabah Arezki & Alou Adessé Dama, 2021. "Revisiting the Relationship between Trade Liberalization and Taxation," Post-Print hal-03526003, HAL.
    • Handle: RePEc:hal:journl:hal-03526003
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    Cited by:

    1. Kym Anderson, 2023. "Agriculture's globalization: Endowments, technologies, tastes and policies," Journal of Economic Surveys, Wiley Blackwell, vol. 37(4), pages 1314-1352, September.
    2. Keshmeer Makun & Baljeet Singh, 2025. "Trade deregulation and fiscal revenue in selected Pacific Island countries," PLOS ONE, Public Library of Science, vol. 20(1), pages 1-16, January.
    3. Sèna Kimm Gnangnon, 2023. "Trade costs and tax transition reform in developing countries," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 31(4), pages 941-977, October.
    4. Godfrey J. Kweka, 2024. "Terms of trade volatility and tax revenue in Sub‐Saharan African countries," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 95(3), pages 655-674, September.
    5. Anderson, Kym, 2022. "Trade-related food policies in a more volatile climate and trade environment," Food Policy, Elsevier, vol. 109(C).
    6. Timm Betz & Amy Pond, 2025. "Governments as borrowers and regulators," The Review of International Organizations, Springer, vol. 20(1), pages 189-218, March.
    7. Betz, Timm & Pond, Amy, 2025. "Governments as Borrowers and Regulators," SocArXiv gr37y_v1, Center for Open Science.

    More about this item

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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