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The Fiscal State in Africa: Evidence from a century of growth

Albers, Thilo LU ; Jerven, Morten LU and Suesse, Marvin LU (2020) In African Economic History Working Paper Series
Abstract
Why do large differences in fiscal capacity exist between states in the Global South? We constructa comprehensive new dataset of tax and revenue collection for 46 African polities from 1900 to2015. Descriptive analyses show that many polities in Africa have been characterized by stronggrowth in real tax collection. As a next step, we employ these data to test theories of fiscal capac-ity in a long-run panel setting, using fixed-effects and causal estimation techniques. The resultsshow democratic institutions and interstate warfare can increase fiscal capacity, while governmentturnover reduces it. However, these factors are conditional on the availability of debt financingand external aid, which by themselves reduce incentives to invest... (More)
Why do large differences in fiscal capacity exist between states in the Global South? We constructa comprehensive new dataset of tax and revenue collection for 46 African polities from 1900 to2015. Descriptive analyses show that many polities in Africa have been characterized by stronggrowth in real tax collection. As a next step, we employ these data to test theories of fiscal capac-ity in a long-run panel setting, using fixed-effects and causal estimation techniques. The resultsshow democratic institutions and interstate warfare can increase fiscal capacity, while governmentturnover reduces it. However, these factors are conditional on the availability of debt financingand external aid, which by themselves reduce incentives to invest in fiscal capacity. Leveragingnew data on exogenous movements in commodity prices, we show that resource income does notgenerally lead to lower capacity. These insights add important nuance to established theories ofstate-building. (Less)
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author
; and
organization
publishing date
type
Working paper/Preprint
publication status
published
subject
keywords
fiscal capacity, taxes, Africa, institutions, resources
in
African Economic History Working Paper Series
issue
55/2020
pages
56 pages
language
English
LU publication?
yes
id
9e1a0aa9-42cc-40cf-86c8-2278df7ed8ab
date added to LUP
2020-12-07 17:27:10
date last changed
2020-12-09 16:06:41
@misc{9e1a0aa9-42cc-40cf-86c8-2278df7ed8ab,
  abstract     = {{Why do large differences in fiscal capacity exist between states in the Global South? We constructa comprehensive new dataset of tax and revenue collection for 46 African polities from 1900 to2015.  Descriptive analyses show that many polities in Africa have been characterized by stronggrowth in real tax collection. As a next step, we employ these data to test theories of fiscal capac-ity in a long-run panel setting, using fixed-effects and causal estimation techniques.  The resultsshow democratic institutions and interstate warfare can increase fiscal capacity, while governmentturnover reduces it.  However, these factors are conditional on the availability of debt financingand external aid, which by themselves reduce incentives to invest in fiscal capacity.  Leveragingnew data on exogenous movements in commodity prices, we show that resource income does notgenerally lead to lower capacity.  These insights add important nuance to established theories ofstate-building.}},
  author       = {{Albers, Thilo and Jerven, Morten and Suesse, Marvin}},
  keywords     = {{fiscal capacity; taxes; Africa; institutions; resources}},
  language     = {{eng}},
  month        = {{09}},
  note         = {{Working Paper}},
  number       = {{55/2020}},
  series       = {{African Economic History Working Paper Series}},
  title        = {{The Fiscal State in Africa: Evidence from a century of growth}},
  url          = {{https://lup.lub.lu.se/search/files/87692814/AEHN_WP_55.pdf}},
  year         = {{2020}},
}