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Monopoly of Taxation Without a Monopoly of Violence: The Weak State’s Trade-Offs From Taxation

Author

Listed:
  • Soeren J. Henn
  • Christian Mastaki Mugaruka
  • Miguel Ortiz
  • Raúl Sánchez de la Sierra
  • David Qihang Wu

Abstract

This study presents a new economic perspective on state-building based on a case study in the Democratic Republic of the Congo’s hinterland. We explore the implications for the state of considering rebels as stationary bandits. When the state, through a military operation, made it impossible for rebels to levy taxes, it inadvertently encouraged them to plunder the assets of the very citizens they previously preferred to tax. When it negotiated with rebels instead, this effect was absent, but negotiating compromised the state’s legitimacy and prompted the emergence of new rebels. The findings suggest that attempting to increase taxation by a weak state in the hinterland could come at the expense of safety in the medium term and of the integrity of the state in the long term.

Suggested Citation

  • Soeren J. Henn & Christian Mastaki Mugaruka & Miguel Ortiz & Raúl Sánchez de la Sierra & David Qihang Wu, 2021. "Monopoly of Taxation Without a Monopoly of Violence: The Weak State’s Trade-Offs From Taxation," NBER Working Papers 28631, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:28631
    Note: DEV POL
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    More about this item

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • P26 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Property Rights
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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