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Tying governments' hands in commodity taxation

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  • Schuknecht, Ludger

Abstract

In the 1970s, taxation of windfall profits from primary products and intervention in trade and production has tempted governments into expansionary fiscal policies while stifling the private sector and depressing growth. However, the experience of the recent coffee boom has so far been more favourable: those African countries which liberalized and left a large share of the windfall with the private sector, and which committed themselves to fiscal austerity via adjustment programs have shown better results in terms of fiscal stability, private sector responses and economic growth than countries which did not reform. These findings suggest that constraints on discretionary government policies are desirable, and domestic institutions and international commitments could serve such purpose.

Suggested Citation

  • Schuknecht, Ludger, 1998. "Tying governments' hands in commodity taxation," WTO Staff Working Papers ERAD-97-06, World Trade Organization (WTO), Economic Research and Statistics Division.
    • Handle: RePEc:zbw:wtowps:erad9706
    DOI: 10.30875/1a2de301-en
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    References listed on IDEAS

    as
    1. Mr. Sanjeev Gupta & Mr. Kenneth M. Miranda, 1991. "Commodity Booms and Government Expenditure Responses," IMF Working Papers 1991/044, International Monetary Fund.
    2. Schuknecht, Ludger, 1996. "Political Business Cycles and Fiscal Policies in Developing Countries," Kyklos, Wiley Blackwell, vol. 49(2), pages 155-170.
    3. Gian Maria Milesi-Ferretti, 1997. "Fiscal Rules and the Budget Process," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 56(1-2), pages 5-40, June.
    4. Lane, Philip R & Tornell, Aaron, 1996. "Power, Growth, and the Voracity Effect," Journal of Economic Growth, Springer, vol. 1(2), pages 213-241, June.
    5. Psacharopoulos, George, 1994. "Returns to investment in education: A global update," World Development, Elsevier, vol. 22(9), pages 1325-1343, September.
    6. Tanzi, Vito, 1986. "Fiscal Policy Responses to Exogenous Shocks in Developing Countries," American Economic Review, American Economic Association, vol. 76(2), pages 88-91, May.
    7. Ludger Schuknecht, 1996. "Political Business Cycles and Fiscal Policies in Developing Countries," Kyklos, Wiley Blackwell, vol. 49(2), pages 155-170, May.
    8. Ms. Jan Gunning & Mr. Paul Collier, 1996. "Policy towards Commodity Shocks in Developing Countries," IMF Working Papers 1996/084, International Monetary Fund.
    9. Ludger Schuknecht & Mr. Vito Tanzi, 1995. "The Growth of Government and the Reform of the State in Industrial Countries," IMF Working Papers 1995/130, International Monetary Fund.
    10. Mr. David C Nellor & Mr. Emil M Sunley, 1994. "Fiscal Regimes for Natural Resource Producing Developing Countries," IMF Policy Discussion Papers 1994/024, International Monetary Fund.
    11. Devarajan, Shantayanan & Go, Delfin & Schiff, Maurice & Suthiwart-Narueput, Sethaput, 1996. "The whys and why nots of export taxation," Policy Research Working Paper Series 1684, The World Bank.
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    Cited by:

    1. Thorvaldur Gylfason, 2001. "Nature, Power and Growth," Scottish Journal of Political Economy, Scottish Economic Society, vol. 48(5), pages 558-588, November.
    2. Dehn, Jan, 2000. "The effects on growth of commodity price uncertainty and shocks," Policy Research Working Paper Series 2455, The World Bank.
    3. Akiyama, Takamasa & Baffes, John & Larson, Donald F. & Varangis, Panos, 2003. "Commodity market reform in Africa: some recent experience," Economic Systems, Elsevier, vol. 27(1), pages 83-115, March.
    4. Paul Collier & Jan Willem Gunning, 1999. "Why Has Africa Grown Slowly?," Journal of Economic Perspectives, American Economic Association, vol. 13(3), pages 3-22, Summer.
    5. Romero-Ávila, Diego, 2009. "Multiple Breaks, Terms of Trade Shocks and the Unit-Root Hypothesis for African Per Capita Real GDP," World Development, Elsevier, vol. 37(6), pages 1051-1068, June.

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    More about this item

    Keywords

    Commodity booms; terms of trade; political economy; fiscal policies; export taxes; public expenditure; savings and investment; Africa;
    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
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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