Craigwell, Roland C and Thomas, Chrystal (2010): Revisiting the effect of country size on taxation in developing countries. Published in: Journal of Public Policy Analysis , Vol. 4, (2010): pp. 99-122.
Download (465kB) | Preview
In developed and developing countries, taxation makes up a significant part of government‟s current total revenue. Tax efficiency is important in order to maximize revenue that can be used in the redistribution of wealth and public expenditure. Larger economies, however, experience difficulties in remaining efficient. This study, therefore, seeks to investigate the effect country size has on tax revenues for developing countries and to discuss whether the findings of Codrington (1989) in the 1980s still hold in the twenty-first century. Analytical and empirical methodologies were conducted using a total of thirty-four countries. Conflicting results were found. Analytically, size played a discriminating role with respect to utilization of the tax systems as 72.6 percent were employed by maxi-states while 59.7 percent were adopted by small economies. Micro economies were heavily reliant on international trade and transaction taxes. Empirically, population positively influenced tax-to-GDP ratios while openness was statistically insignificant.
|Item Type:||MPRA Paper|
|Original Title:||Revisiting the effect of country size on taxation in developing countries|
|Keywords:||Taxation, country size, developing countries, panel data|
|Subjects:||C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C23 - Panel Data Models ; Spatio-temporal Models
H - Public Economics > H2 - Taxation, Subsidies, and Revenue
O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O50 - General
|Depositing User:||Roland Craigwell|
|Date Deposited:||17. Sep 2011 05:50|
|Last Modified:||30. Dec 2015 17:22|
Amiti, M., 1998. Inter-industry trade in manufactures: Does country size matters? Journal of International Economics 44(2), 231-255.
Armstrong, H., De Kervenoael, R., Li, X., Read, R., 1998. A Comparison of the Economic Performance of Different Micro-states, and Between Micro-states andLarger Countries. World Development 26(4), 639-656.
Atkinson, A., 1981. On Switch to Indirect Taxation. Fiscal Studies 2(2), 1-8.
Balassa, B., 1969. Country Size and Trade Patterns: Comment. The American Economic Review 59(1), 201-204
Bray, M., 1987. Small Countries in International Development. Journal of Development Studies 23(1).
Briguglio, L., 2002. The Economic Vulnerability of Small Island Developing States. In Hsiao, H.H. and Tsai, H.M. (Eds.) Sustainable Development for Island Societies: Taiwan and the World, National Central University, Taiwan.
__________, 1995. Small island developing states and their economic vulnerabilities. World Development 23(9), 1615-1632.
Bucovetsky, S., 1991. Asymmetric tax competition. Journal of Urban Economics 30, 167-181.
Bovenberg, L., 1987. Indirect Taxation in Developing Countries: A General Equilibrium Approach. IMF Staff Papers 34(2), 333-73.
Calvo, G., Costly Trade Liberalization: Durable Goods and Capital Mobility. IMF Staff Papers 35(3), 461-73
Chelliah, R. et al., 1975. Tax Ratios and Tax Effort in Developing Countries 1969-71. IMF Staff Papers 22(1).
Chenery, H., Syrquin, M., 1975. Patterns of development, 1950-1970. London: Oxford University Press.
Codrington, H., 1989. Country Size and Taxation in Developing Countries. The Journalof Development Studies 25(4), 508-520.
Commonwealth Secretariat, 2007. Small States: Economic Review and Basic Statistics. Annual Series: Vol. 12.
Coulson, A., 1982. Tanzania: a political economy. Oxford: Clarendon Press.
Crowards, T., 2002. Defining the category of small states. Journal Of InternationalDevelopment 14, 143-179.
Demas, W., 1965. The Economics of Development in Small Countries with SpecialReference to the Caribbean. Montreal: McGill University Press.
Diggines, C., 1985. The Problem of Small States. Round Table 295, 191-205.
Down, I., 2007. Trade Openness, Country Size and Economic Volatility: TheCompensation Hypothesis Revisted. Business and Politics 9(2), Article 3.
Downes, A., 1988. On the Statistical Measurement of Smallness: A Principal ComponentMeasure of Country Size. Social and Economic Studies 37(3), 75-96.
Downes, A., 1990. A Multivariate Statistical Analysis of Country Classification: The Identification of Small Developing Countries. Social and Economic Studies 39(1), 71-88.
Haufler, A., Wooton, I., 1999. Country size and tax competition for foreign direct investment. Journal of Public Economics 71, 121-139.
Heston et al. Penn World Tables 6.2 – CHASS Data Centre. University of Toronto.
Imam, A., Jacobs, D., 2007. Effect of Corruption on Tax Revenues in the Middle East. IMF Working Paper : WP/07/270. International Monetary Fund. 2008. World Economic Outlook Report. April.
___________. Government Finance Statistics Yearbook. various issues.
Jalan, B., 1982. Classification of Economies by Size, in B. Jalan (ed.), Problems and Policies in Small Economies. London: Croom Helm.
Kanbur, R., Keen, M., 1993. Jeux Sana Frontieres: Tax Competition and Tax Coordination When Countries Differ in Size. The American Economic Review 83(4), 877-892.
Kao, C., Chiang, M., 2000. On the estimation and inference of a cointegrated regression in panel data. Advances in Econometrics 15, 179-222.
Keesing, D., 1968. Population and Industrial Development: Some Evidence from Trade Patterns. The American Economic Review 58, 448-455.
Khalaf, N., 1979. Country size and Economic growth and development. Journal of Development Studies 16(1), 67-72.
Kuznets, S., 1963. Economic Growth of Small Nations, in E.A.G Robinson (ed.), The Economic Consequences of the Size of Nations. London: Macmillan.
Liou, F., Ding, C., 2002. Subgrouping Small States on Socioeconomic Characteristics. World Development 30(7), 1289-1306.
Lloyd, P., Sundrum, R., 1982. Characteristics of small economies, in B. Jalan (ed.), Problems and Policies in Small Economies, London: Croom Helm, 17-38.
Lotz, J., Morss, E., 1967. Measuring Tax Effort in Developing Countries. IMF Staff Papers 14(3).
Mark, N., Sul, D., 2003. Cointegration Vector Estimation by Panel DOLS and Long-RUN money Demand. Oxford Bulletin of Economics and Statistics 65(5), 655-80.
Morrissey, O., Filatotchev, I., 2000. Globalization and Trade: The Implications for Exports from Marginalized Economies. The Journal of Development Studies 37(2), 1-12.
Ocampo, J., 2002. Small Economies in the Face of Globalization. Third William G. Demas Memorial Lecture at the Caribbean Development Bank.
Ohsawa, Y., 2003. A Spatial Tax Harmonization Model. European Economic Review 47, 443-459.
________. Cross-border shopping and tax competition among governments. Regional Science and Urban Economics 29, 33-51.
Ottaviano, G., Ypersele, T., 2005. Market Size and tax competition. Journal of International Economics 67, 25-46.
Read, R., 2001. Growth, Economic Development and Structural Transition in Small Vulnerable States. United Nations University: WIDER. Discussion Paper 2001/59.
Rose, A., 2006. Size really doesn‟t matter: In search of a national scale effect. Journal of the Japanese and International Economies 20, 482-507.
Selwyn, P., 1980. Smallness and Islandness. World Development 8, 945-951.
Shenfield, A., 1968. The Political Economy of Tax Avoidance. Great Britain: Harrison and Son Limited.
Srinivasan, T., 1986. The costs and benefits of being a small, remote, island, landlocked or ministate economy. Research Observer 1, 205-18.
Tait, A., et al., 1979. International Comparisons of Taxation for Selected Developing Countries, 1972-76. IMF Staff Papers 26(1).
Tanzi, V., 1989. The Impact of Macroeconomic Policies on the Level of Taxation and the Fiscal Balance in Developing Countries. IMF Staff Papers 36(3), 633-656.
Tanzi, V., Shome, P., 1993. A Primer on Tax Evasion. IMF Staff Papers 40(4), 807-828.
Taylor, C., 1969. Statistical typology of microstates and territories: towards a definition of a microstate. Appendix in UNITAR, Status and Problems of Very Small States and Territories, New York: United Nations. Reprinted as, Small States and Territories: Status and Problems, New York: Arno Press, 1971.
Thomas, C., 1974. Dependence and Transformation: The Economics of the Transition to Socialism. New York: Monthly Press Review.
Trandel, G., 1994. Interstate commodity tax differentials and the distribution of residents. Journal of Public Economics 53(3), 435-457.
United Nations, 2007. World Population Prospects: The 2006 Revision. Department of Economic and Social Affairs: Population Division.
Wilson, J., 1991. Tax competition and interregional differences in factor endowments. Regional Science and Urban Economics 21, 423-452.
CIA, 2008. The World Factbook