“…Intuitively, foreign aid represents a relatively costless windfall that could become a substitute for domestic revenue (Bräutigam, 2000), while poor quality of institutions may induce tax evasion and (resource) rent-seeking (Tanzi and Davoodi, 1997;Collier, 2005). While the effect of foreign aid is not consistently negative in empirical research (Gupta and others, 2003;Drummond, Srivastava, and Oliveira, 2012), the adverse effect of corruption on revenue is more widely supported empirically (Davoodi and Grigorian, 2007;Bird, Martinez-Vazquez, and Torgler, 2008;Bornhorst, Gupta, and Thornton, 2009;and Drummond, Srivastava, and Oliveira, 2012). This paper focuses explicitly on whether countries with higher resource revenue tend to receive lower taxation revenue from other forms of income and consumption expenditure.…”