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The Political Economy of Tax Incentives for Investment in the Dominican Republic: “Doctoring the Ball”

Author

Listed:
  • Christian Daude

    (OECD)

  • Hamlet Gutiérrez
  • Ángel Melguizo

    (OECD)

Abstract

Tax incentives can be a useful tool to stimulate investment in developing countries. However, in these countries interest groups often are able to exert considerable influence in its management, if not its design. From a power-based approach to the political economy of tax reform we find how interest groups work within the institutional framework to seek outcomes that best fit their objectives. When unsuccessful, they become powerful advocates of change. These power dynamics have important implications for the design and management of tax incentives in developing economies. Les mesures d’incitations fiscales peuvent être un outil utile pour stimuler l’investissement dans les pays en développement. Cependant, dans ces pays, les groupes d’intérêt sont souvent en mesure d’exercer une influence considérable sur sa gestion, voire sur sa conception. En suivant une approche de l’économie politique de la réforme fiscale basée sur le pouvoir nous trouvons comment les groupes d’intérêt fonctionnent dans le cadre institutionnel pour obtenir les résultats qui correspondent le mieux à leurs objectifs. Lorsqu’ils échouent, ils deviennent de puissants partisans du changement. Ces dynamiques de pouvoir ont d’importantes implications pour la conception et la gestion des mesures d’incitations fiscales dans les pays en développement.

Suggested Citation

  • Christian Daude & Hamlet Gutiérrez & Ángel Melguizo, 2014. "The Political Economy of Tax Incentives for Investment in the Dominican Republic: “Doctoring the Ball”," OECD Development Centre Working Papers 322, OECD Publishing.
  • Handle: RePEc:oec:devaaa:322-en
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    File URL: http://dx.doi.org/10.1787/5jz3wkh45kmw-en
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    Keywords

    Dominican Republic; fiscal policy; incitatifs fiscaux; political economy; politique fiscale; République dominicaine; tax incentives; économie politique;

    JEL classification:

    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy

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