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Globalisation and Developing Countries - a Shrinking Tax Base?

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Listed:
  • Joshua Aizenman
  • Yothin Jinjarak

Abstract

This paper evaluates the impact of globalisation on tax bases of countries at varying stages of development. We see globalisation as a process that induces countries to embrace greater trade and financial integration. This in turn should shift their tax revenue from 'easy to collect' taxes (tariffs and seigniorage) towards 'hard to collect' taxes (value added and income taxes). We find that trade and financial openness have a positive association with the 'hard to collect' taxes, and a negative association with the easy to collect taxes.

Suggested Citation

  • Joshua Aizenman & Yothin Jinjarak, 2009. "Globalisation and Developing Countries - a Shrinking Tax Base?," Journal of Development Studies, Taylor & Francis Journals, vol. 45(5), pages 653-671.
    • Handle: RePEc:taf:jdevst:v:45:y:2009:i:5:p:653-671
    DOI: 10.1080/00220380802582338
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    More about this item

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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