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Assessing the relationship between democracy and domestic taxes in developing countries

Author

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  • Helene Ehrhart

    (CERDI - University of Auvergne and Banque de France)

Abstract

To what extent differences across developing countries in their domestic tax mobilisation can be explained by their political regime? Using a panel of 66 developing countries over 1990-2005, we found that democracy matters for achieving higher domestic taxes mobilisation. The constraints on the executive are especially of importance to counter the government's propensity to cave in for special interests and be insufficiently welfare minded. Moreover, democracy is specifically needed in natural resource rich countries to make natural resource rents contribute to higher domestic taxes and no longer be an impediment to a sustained tax system.

Suggested Citation

  • Helene Ehrhart, 2012. "Assessing the relationship between democracy and domestic taxes in developing countries," Economics Bulletin, AccessEcon, vol. 32(1), pages 551-566.
    • Handle: RePEc:ebl:ecbull:eb-10-00487
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    Cited by:

    1. Tania Masi & Antonio Savoia & Kunal Sen, 2018. "Is there a fiscal resource curse? Resource rents, fiscal capacity and political institutions," Global Development Institute Working Paper Series esid-096-18, GDI, The University of Manchester.
    2. Günay ÖZCAN & İbrahim ÖZMEN, 2019. "Does democracy increase total tax revenues? The case of selected OECD countries," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(3(620), A), pages 45-58, Autumn.
    3. Yannick Lucotte, 2010. "Adoption of inflation targeting and tax revenue performance in emerging market economies: An empirical investigation," Post-Print halshs-00505140, HAL.
    4. Yannick LUCOTTE, 2010. "The Choice of Adopting Inflation Targeting in Emerging Economies: Do Domestic Institutions Matter?," LEO Working Papers / DR LEO 1561, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    5. Yucel Demirkclic & Fazli Yildiz & Ersin Nail Sagdic, 2023. "An Analysis of the Relationship Between Taxation and Democracy: The Example of European Union Member and Candidate Countries (2010-2020)," Journal of Economic Policy Researches, Istanbul University, Faculty of Economics, vol. 10(2), pages 457-483, July.
    6. Yawovi Mawussé Isaac Amedanou, 2021. "Politics, Institutions and Tax Revenue Mobilization in West African Economic and Monetary Union (WAEMU) Countries," Working Papers hal-03255316, HAL.
    7. Lucotte, Yannick, 2012. "Adoption of inflation targeting and tax revenue performance in emerging market economies: An empirical investigation," Economic Systems, Elsevier, vol. 36(4), pages 609-628.
    8. repec:hal:cesptp:halshs-00826999 is not listed on IDEAS
    9. Abdramane Camara, 2023. "The Effect of Foreign Direct Investment on Tax Revenue," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 65(1), pages 168-190, March.
    10. Jean Louis Combes & Christian Ebeke & Mathilde Maurel, 2015. "The effect of remittances prior to an election," Applied Economics, Taylor & Francis Journals, vol. 47(38), pages 4074-4089, August.
    11. Lucotte, Yannick, 2010. "Adoption of inflation targeting and tax revenue performance in emerging market economies: An empirical investigation," MPRA Paper 23871, University Library of Munich, Germany.
    12. Shantayanan Devarajan, Hélène Ehrhart, Tuan Minh Le, Gaël Raballan, 2011. "Direct Redistribution, Taxation, and Accountability in Oil-Rich Economies- A Proposal- Working Paper 281," Working Papers 281, Center for Global Development.
    13. Clarisse Nguedam Ntouko, 2013. "Regulatory Framework and Private Investment: Empirical Evidence for Developing Countries," Economics Bulletin, AccessEcon, vol. 33(1), pages 494-510.
    14. repec:idq:ictduk:13998 is not listed on IDEAS
    15. Musharraf Rasool Cyan & Jorge Martinez-Vazquez & Violeta Vulovic, 2014. "New approaches to measuring tax effort," Chapters, in: Richard M. Bird & Jorge Martinez-Vazquez (ed.), Taxation and Development: The Weakest Link?, chapter 2, pages 27-68, Edward Elgar Publishing.
    16. repec:hal:cdiwps:halshs-00826999 is not listed on IDEAS
    17. Lucotte, Yannick, 2010. "The choice of adopting inflation targeting in emerging economies: Do domestic institutions matter?," MPRA Paper 27118, University Library of Munich, Germany.
    18. Ivanyna, Maksym & von Haldenwang, Christian, 2012. "A comparative view on the tax performance of developing countries: Regional patterns, non-tax revenue and governance," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 6, pages 1-44.
    19. Bharatee Dash & Angara Raja, 2014. "Do political determinants affect revenue collection? Evidence from the Indian states," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 61(3), pages 253-278, September.
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    21. Ameth Saloum Ndiaye & Alain Siri, 2016. "Capital Flight from Burkina Faso: Drivers and Impact on Tax Revenue," African Development Review, African Development Bank, vol. 28(S1), pages 100-112, April.
    22. Abdramane Camara, 2019. "The effect of foreign direct investment on tax revenue in developing countries," Working Papers hal-03188025, HAL.
    23. Yawovi Mawussé Isaac Amedanou, 2021. "Politics, Institutions and Tax Revenue Mobilization in West African Economic and Monetary Union (WAEMU) Countries," CERDI Working papers hal-03255316, HAL.

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    More about this item

    Keywords

    Tax revenue; Democracy; Natural resources; Developing countries; Panel;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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