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From revenues to democracy?

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  • Fahad Hassan Khan

Abstract

This paper contributes to the historical political economy literature, which considers the fiscal imperatives of the state to be amongst the driving forces behind the emergence of representative systems of government, by examining the impact on democracy of a government's reliance on alternative sources of revenue. 'Taxation' and 'natural resource rent extraction' are considered as alternative sources of revenue within a unified framework. I develop a simple game-theoretic model which postulates that an increase in tax revenues, or a decrease in natural resource rents, enhances democracy. The predictions of the model are empirically tested using a cross-national panel dataset, covering 132 countries over the time period 1990-2009. The evidence is in line with the theoretical model.

Suggested Citation

  • Fahad Hassan Khan, 2014. "From revenues to democracy?," Departmental Working Papers 2014-25, The Australian National University, Arndt-Corden Department of Economics.
    • Handle: RePEc:pas:papers:2014-25
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    File URL: https://crawford.anu.edu.au/acde/publications/publish/papers/wp2014/wp_econ_2014_25.pdf
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    More about this item

    Keywords

    taxation; natural resource rents; democratisation;
    All these keywords.

    JEL classification:

    • B5 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches
    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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