Institutional and political drivers for copper government take: new evidence for African and Latin American countries

Our study addresses the issue of rent sharing and its determinants for the copper-producing countries in Africa and Latin America, which are among the world's leading copper producers. We use an original database to construct our mining tax policy indicator, the average effective tax rate (AETR), and combine it with four other databases to study its determinants. We pay particular attention to political regimes, political environments, and government party affiliations to explain mining tax policies. Our main results suggest that a democratic regime is likely to capture a larger share of the rent than an autocratic regime. Our results also show that the institutional environment, regardless of the political regime, influences rent sharing, as does EITI adoption. Finally, our results suggest that left-wing governments capture a larger share of the rent than right-wing and centrist ones. However, whatever the political regime or the political affiliation of the governments in place, the share of the rent captured by the State remains low about the theory of optimal taxation.