IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/33470.html
   My bibliography  Save this paper

Revisiting the effect of country size on taxation in developing countries

Author

Listed:
  • Craigwell, Roland C
  • Thomas, Chrystal

Abstract

In developed and developing countries, taxation makes up a significant part of government‟s current total revenue. Tax efficiency is important in order to maximize revenue that can be used in the redistribution of wealth and public expenditure. Larger economies, however, experience difficulties in remaining efficient. This study, therefore, seeks to investigate the effect country size has on tax revenues for developing countries and to discuss whether the findings of Codrington (1989) in the 1980s still hold in the twenty-first century. Analytical and empirical methodologies were conducted using a total of thirty-four countries. Conflicting results were found. Analytically, size played a discriminating role with respect to utilization of the tax systems as 72.6 percent were employed by maxi-states while 59.7 percent were adopted by small economies. Micro economies were heavily reliant on international trade and transaction taxes. Empirically, population positively influenced tax-to-GDP ratios while openness was statistically insignificant.

Suggested Citation

  • Craigwell, Roland C & Thomas, Chrystal, 2010. "Revisiting the effect of country size on taxation in developing countries," MPRA Paper 33470, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:33470
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/33470/1/MPRA_paper_33470.pdf
    File Function: original version
    Download Restriction: no

    References listed on IDEAS

    as
    1. Tom Crowards, 2002. "Defining the category of 'small' states," Journal of International Development, John Wiley & Sons, Ltd., vol. 14(2), pages 143-179.
    2. Wilson, John Douglas, 1991. "Tax competition with interregional differences in factor endowments," Regional Science and Urban Economics, Elsevier, vol. 21(3), pages 423-451, November.
    3. Vito Tanzi & Parthasarathi Shome, 1993. "A Primer on Tax Evasion," IMF Staff Papers, Palgrave Macmillan, vol. 40(4), pages 807-828, December.
    4. Imam Patrick Amir & Jacobs Davina, 2014. "Effect of Corruption on Tax Revenues in the Middle East," Review of Middle East Economics and Finance, De Gruyter, vol. 10(1), pages 1-24, April.
    5. Bucovetsky, S., 1991. "Asymmetric tax competition," Journal of Urban Economics, Elsevier, vol. 30(2), pages 167-181, September.
    6. Raja J. Chelliah & Hessel J. Baas & Margaret R. Kelly, 1975. "Tax Ratios and Tax Effort in Developing Countries, 1969-71 (Pression fiscale et effort fiscal dans les pays en développement, 1969-71) (Coeficientes y esfuerzo tributarios en los países en desarroll," IMF Staff Papers, Palgrave Macmillan, vol. 22(1), pages 187-205, March.
    7. Ottaviano, Gianmarco I.P. & van Ypersele, Tanguy, 2005. "Market size and tax competition," Journal of International Economics, Elsevier, vol. 67(1), pages 25-46, September.
    8. Haufler, Andreas & Wooton, Ian, 1999. "Country size and tax competition for foreign direct investment," Journal of Public Economics, Elsevier, vol. 71(1), pages 121-139, January.
    9. Liou, F. M. & Ding, C. G., 2002. "Subgrouping Small States Based on Socioeconomic Characteristics," World Development, Elsevier, vol. 30(7), pages 1289-1306, July.
    10. Amiti, Mary, 1998. "Inter-industry trade in manufactures: Does country size matter?," Journal of International Economics, Elsevier, vol. 44(2), pages 231-255, April.
    11. Syrquin, M. & Chenery, H.B., 1989. "Patterns Of Development, 1950 To 1983," World Bank - Discussion Papers 41, World Bank.
    12. Vito Tanzi, 1989. "The Impact of Macroeconomic Policies on the Level of Taxation and the Fiscal Balance in Developing Countries," IMF Staff Papers, Palgrave Macmillan, vol. 36(3), pages 633-656, September.
    13. A. Lans Bovenberg, 1987. "Indirect Taxation in Developing Countries: A General Equilibrium Approach," IMF Staff Papers, Palgrave Macmillan, vol. 34(2), pages 333-373, June.
    14. Read, Robert, 2001. "Growth, Economic Development and Structural Transition in Small Vulnerable States," WIDER Working Paper Series 059, World Institute for Development Economic Research (UNU-WIDER).
    15. Bovenberg, A.L., 1987. "Indirect taxation in developing countries : A general equilibrium approach," Other publications TiSEM adac046e-0845-4c4e-904a-5, Tilburg University, School of Economics and Management.
    16. Jørgen R. Lotz & Elliott R. Morss, 1967. "Measuring "Tax Effort" in Developing Countries (Evaluation de l'effort fiscal dans les pays en voie de développement) (Medición del "esfuerzo tributario" de los países en desarr," IMF Staff Papers, Palgrave Macmillan, vol. 14(3), pages 478-499, November.
    17. Trandel, Gregory A., 1994. "Interstate commodity tax differentials and the distribution of residents," Journal of Public Economics, Elsevier, vol. 53(3), pages 435-457, March.
    18. Alan A. Tait & Wilfrid L. M. Grätz & Barry J. Eichengreen, 1979. "International Comparisons of Taxation for Selected Developing Countries, 1972-76 (Comparaisons entre les systèmes fiscaux de certains pays en développement, 1972-76) (Comparaciones internacionales d," IMF Staff Papers, Palgrave Macmillan, vol. 26(1), pages 123-156, March.
    19. Briguglio, Lino, 1995. "Small island developing states and their economic vulnerabilities," World Development, Elsevier, vol. 23(9), pages 1615-1632, September.
    20. Vito Tanzi & Parthasarathi Shome, 1993. "A Primeron Tax Evasion," IMF Working Papers 93/21, International Monetary Fund.
    21. Balassa, Bela, 1969. "Country Size and Trade Patterns: Comment," American Economic Review, American Economic Association, vol. 59(1), pages 201-204, March.
    22. Selwyn, Percy, 1980. "Smallness and islandness," World Development, Elsevier, vol. 8(12), pages 945-951, December.
    23. Srinivasan, T N, 1986. "The Costs and Benefits of Being a Small, Remote, Island, Landlocked, or Ministate Economy," World Bank Research Observer, World Bank Group, vol. 1(2), pages 205-218, July.
    24. A. B. Atkinson, 1981. "On the switch to indirect taxation," Fiscal Studies, Institute for Fiscal Studies, vol. 2(2), pages 1-8, July.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Taxation; country size; developing countries; panel data;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:33470. 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: (Joachim Winter) or (Rebekah McClure). General contact details of provider: http://edirc.repec.org/data/vfmunde.html .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.