State-Building in Resource-Rich Economies

Jensen, Anders

doi:10.1007/s11293-011-9269-z

Cited by 36 publications

(30 citation statements)

References 12 publications

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“…Knack (2009) provided initial cross-section evidence, partly consistent with this hypothesis. Jensen (2011) provides further evidence from a panel of 30 hydrocarbon-rich economies, finding that a 1 percent increase in hydrocarbon revenues causes a 1.5 percent decrease in non-resource tax effort, a proxy for fiscal capacity. An earlier panel study by Bornhorst et al (2009), on a similar sample of countries and variables, finds a smaller effect: an additional percentage point of revenue from hydrocarbons reduces revenues from other domestic sources by 0.19 percentage points of GDP.…”

Section: Resource Rents Fiscal Capacity and Political Institutionsmentioning

confidence: 83%

Is There a Fiscal Resource Curse? Resource Rents, Fiscal Capacity and Political Institutions

2018

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Section: Resource Rents Fiscal Capacity and Political Institutionsmentioning

confidence: 83%

Is There a Fiscal Resource Curse? Resource Rents, Fiscal Capacity and Political Institutions

2018

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“…In support of this idea, Jensen (2011) finds that a 1 percent increase in the share of natural resource rents in total government income is associated with a 1.4 percent lower share of taxation in GDP. While we do not know of research that convincingly demonstrates this conclusion, it is entirely possible that high foreign aid inflows and abundant natural resources have similar consequences, reducing the incentive to generate taxation from domestic sources.…”

Section: Aid and Resource Dependencementioning

confidence: 97%

Why Do Developing Countries Tax So Little?

Besley

Persson

2014

Journal of Economic Perspectives

485

237

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Low-income countries typically collect taxes of between 10 to 20 percent of GDP while the average for high-income countries is more like 40 percent. In order to understand taxation, economic development, and the relationships between them, we need to think about the forces that drive the development process. Poor countries are poor for certain reasons, and these reasons can also help to explain their weakness in raising tax revenue. We begin by laying out some basic relationships regarding how tax revenue as a share of GDP varies with per capita income and with the breadth of a country's tax base. We sketch a baseline model of what determines a country's tax revenue as a share of GDP. We then turn to our primary focus: why do developing countries tax so little? We begin with factors related to the economic structure of these economies. But we argue that there is also an important role for political factors, such as weak institutions, fragmented polities, and a lack of transparency due to weak news media. Moreover, sociological and cultural factors—such as a weak sense of national identity and a poor norm for compliance—may stifle the collection of tax revenue. In each case, we suggest the need for a dynamic approach that encompasses the two-way interactions between these political, social, and cultural factors and the economy.

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“…When Besley and Persson (, ) introduced natural resources in their framework, they too predict that natural resource dependence leads to weaker state capacity. Crivelli and Gupta () found evidence of resource revenues having a negative effect on income taxes, while Jensen () suggested that “resource intensification weakens state‐building by impeding the state's fiscal capacity.”…”

Section: Introductionmentioning

confidence: 99%

“…When Persson (2010, 2011) introduced natural resources in their framework, they too predict that natural resource dependence leads to weaker state capacity. Crivelli and Gupta (2014) found evidence of resource revenues having a negative effect on income taxes, while Jensen (2011) suggested that "resource intensification weakens state-building by impeding the state's fiscal capacity." 2 The approach taken in these papers implicitly assumes that citizens automatically increase compliance in response to greater tax enforcement as a part of the state's investments in capacity.…”

Section: Introductionmentioning

confidence: 99%

Kleptocracy and tax evasion under resource abundance

Mohtadi

Ross

Jarrett

et al. 2019

Economics & Politics

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Evidence has shown that petroleum wealth is associated with less transparency and at the same time less tax collection. In this paper, we find that the two issues are linked through the citizens’ tax evasion behavior. We develop a model to explain this link and conduct extensive empirical tests of its validity. The explanation is that officials tradeoff greater transparency to improve tax compliance against less transparency to increase gains from corruption. Oil windfalls diminish tax revenue needs, causing officials to optimize on less transparency. Seeing this, citizens optimize on a lower level of tax compliance. At equilibrium, both decline with a positive oil shock. We also study the alternative channel in which tax compliance responds to enforcement. Transparency is found to be the more robust channel. Ignoring citizens’ strategic behavior would lead to predicting suboptimal investment in state capacity for tax enforcement. Using giant oil discoveries data combined with oil price data, we develop a dynamic composite instrument and estimate the model with a dynamic panel system generalized method of moments. We find robust support for our explanation and the model's deep structure for 130+ countries and the 1980–2010 period.

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State-Building in Resource-Rich Economies

Abstract: Natural resources, Public finance, H2, 01, E62, 010,

Cited by 36 publications

References 12 publications

Is There a Fiscal Resource Curse? Resource Rents, Fiscal Capacity and Political Institutions

Is There a Fiscal Resource Curse? Resource Rents, Fiscal Capacity and Political Institutions

Why Do Developing Countries Tax So Little?

Kleptocracy and tax evasion under resource abundance

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