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Political Competition and Tax Revenues in Developing Countries

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  • Urbain T. Yogo
  • Martine M. Ngo Njib

Abstract

Building on the literature of the political economy of taxation, this article explores the relationship between political competition and tax revenues using a sample of 89 developing countries from 1988 to 2010. Owing to the inertia of tax variables, we estimate a dynamic panel data model using the Blundell and Bond two†step System†general method of moments. The analysis led to the following results: political competition positively and significantly affects total tax revenues. However, this general pattern slightly differs across the type of taxes; and the net effect of political competition on tax revenues is negative for countries that have adopted fiscal rules. © 2018 UNU†WIDER. Journal of International Development published by John Wiley & Sons, Ltd.

Suggested Citation

  • Urbain T. Yogo & Martine M. Ngo Njib, 2018. "Political Competition and Tax Revenues in Developing Countries," Journal of International Development, John Wiley & Sons, Ltd., vol. 30(2), pages 302-322, March.
    • Handle: RePEc:wly:jintdv:v:30:y:2018:i:2:p:302-322
    DOI: 10.1002/jid.3349
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    References listed on IDEAS

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    1. Jonathan Di John, 2006. "The Political Economy of Taxation and Tax Reform in Developing Countries," WIDER Working Paper Series RP2006-74, World Institute for Development Economic Research (UNU-WIDER).
    2. Jean-Louis Combes & Tahsin Saadi-Sedik, 2006. "How does trade openness influence budget deficits in developing countries?," Journal of Development Studies, Taylor & Francis Journals, vol. 42(8), pages 1401-1416.
    3. repec:idq:ictduk:13712 is not listed on IDEAS
    4. Mr. Christian H Ebeke & Miss Dilan Ölcer, 2013. "Fiscal Policy over the Election Cycle in Low-Income Countries," IMF Working Papers 2013/153, International Monetary Fund.
    5. Moore, Mick, 2014. "Revenue Reform and Statebuilding in Anglophone Africa," World Development, Elsevier, vol. 60(C), pages 99-112.
    6. repec:idq:ictduk:11259 is not listed on IDEAS
    7. Mrs. Nina Budina & Ms. Andrea Schaechter & Miss Anke Weber & Mr. Tidiane Kinda, 2012. "Fiscal Rules in Response to the Crisis: Toward the "Next-Generation" Rules: A New Dataset," IMF Working Papers 2012/187, International Monetary Fund.
    8. Bierbrauer, Felix J. & Boyer, Pierre C., 2013. "Political competition and Mirrleesian income taxation: A first pass," Journal of Public Economics, Elsevier, vol. 103(C), pages 1-14.
    9. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    10. Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, vol. 126(1), pages 25-51, May.
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    2. 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.
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    4. Ali Compaoré & Abrams M.E. Tagem, 2022. "Does aid fragmentation affect tax revenue dynamics in developing countries?: Observations with new tax data," WIDER Working Paper Series wp-2022-99, World Institute for Development Economic Research (UNU-WIDER).
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    6. Rezki, Jahen Fachrul, 2018. "Political Competition and Local Government Performance: Evidence from Indonesia," SocArXiv nekps, Center for Open Science.

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