Fiscal States in Developing Countries: Origins and Developmental Implications

Session Submission Type: Full Paper Panel

Session Description

There has been a revival of interest on the role of states in economic development. Recent research argues that the most developed economies are those where effective states can exercise an important productive role, such as providing an effective administration of justice and resolving coordination failures. And according to this view, the emergence of fiscal states is a fundamental condition for effective statehood. This requires transitioning from a state relying on resources derived from the monarch’s domain to a state where its resources come from the power to tax. A central part of such transformation is developing the administrative capabilities to raise revenues, i.e., acquiring fiscal capacity.
Historically, this process was pivotal to the transformation of the nowadays-advanced European economies, leading to the development of states capable of collecting revenues from a broad tax base and capable of effectively spending public funds on a range of good and services benefitting households and firms. However, it is less clear why we have not seen the same trajectory in less advanced economies, where states are much less effective and often taxation yields only a fraction of the revenues compared to rich countries. The papers in this panel will combine country case studies, cross-country econometric analysis and comparative historical analysis to examine the effects of fiscal states in low- and middle-income countries and its economic, political and historical determinants.

Sub Unit

• Division 12: Comparative Politics of Developing Countries

Individual Presentations

• Constraints on the Executive and Tax Revenues in the Long Run - Kunal Sen, UNU-WIDER

• Fiscal Capacity in Non-democratic States: Origins and Expansion of Income Tax - Per Fredrik Andersson, University of Copenhagen

• Cursed New States? Explaining Democratic Divergence in Extreme Rentier States - Moritz Schmoll, Mohammed VI Polytechnic University; Geoffrey Swenson, City University of London

Chair

• Kunal Sen UNU-WIDER

Discussants

• Kunal Sen UNU-WIDER

• Staffan I. Lindberg V-Dem Institute, University of Gothenburg