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Modern Tax Trends and Economic Growth in a Turbulent World: Insights from Developed and Developing Economies

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  • Sergey V. Bogachov
  • Valentine P. Vishnevsky
  • Aleksandr V. Gurnak
  • Viktoria D. Nekliudova

Abstract

The article examines recent trends in tax level and structure changes within developed and developing economies in relation to economic growth. The study’s significance stems from increasing geo-economic turbulence and emerging risks in the global economy, necessitating fiscal regulation. The analysis spans the period from 2009, post the Great Recession, to the present day. We tested the hypothesis that discernible patterns could be identified through statistical analysis regarding the relationship between tax indicators (level and structure) and economic growth indicators. However, no such clear patterns were found. In essence, it cannot be definitively concluded that reduced tax levels and/or increased indirect tax shares do explicitly foster national economic growth. Tax impact on economic growth varies significantly across developed and developing economies, presenting a complex and nuanced picture. The nature and strength of this influence are largely shaped by the specific circumstances of each location and period. In order to identify their unique impact, counterfactual analysis is required. In the course of further research, it is important to consider, firstly, the increased fiscal activism of the post-pandemic period: in this case, the research outcomes may be different from those obtained for the period already examined. Secondly, considering the ongoing processes of geo-economic fragmentation, it is recommended to re-examine the influence of taxes on economic processes. This investigation should adhere to the evolving framework of new macro-regions worldwide, rather than the conventional dichotomy of developed and developing economies. Participants within these macro-regions, interconnected through supply and value chains, will need to work together to align their tax rules and policies for mutual benefits.

Suggested Citation

  • Sergey V. Bogachov & Valentine P. Vishnevsky & Aleksandr V. Gurnak & Viktoria D. Nekliudova, 2024. "Modern Tax Trends and Economic Growth in a Turbulent World: Insights from Developed and Developing Economies," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 10(1), pages 63-83.
    • Handle: RePEc:aiy:jnljtr:v:10:y:2024:i:1:p:63-83
    DOI: https://doi.org/10.15826/jtr.2024.10.1.157
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    taxation; tax policy; fiscal activism; economic growth; developed economies; developing economies;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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