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Taxation, Non-Tax Revenue and Accountability: New Evidence Using New Cross-Country Data. Resource curse, i.e. the theory stating that natural resource-rich countries that heavily rely on resource revenues are more likely to develop autocratic or dictatorial regimes, has been vastly investigated in the literature. However, although there exists numerous numbers of cross-country studies of the political resource curse, conflicting results and inconsistencies continue to emerge after more than a decade. These inconsistencies can be attributed to imprecise indicators and poor data quality, inconsistent estimation methods, and failure at distinguishing alternative causal processes, linked to tax and non-tax revenue. The main innovation of this paper is the use of the ICTD GRD to re-investigate the relationship between government revenues and democracy. Indeed, this new dataset allows for a clear decomposition of government revenue into tax and non-tax revenue, the latter being mainly composed of natural resource revenues. Then, multiple econometric estimation methods are employed to ensure better robustness of the results (including GMM, Mean-Group, Random and Fixed-Effect, and Logit Error Correction Model). Finally, a whole set of robustness checks are run with the inclusion of longer lags on the revenue variables, alternative measures of democracy and different time periods among others. The authors find stronger evidence of the resource curse than previous studies as the impact of either tax reliance or non-tax revenue on democracy is negative and significant in all the specifications and methods. The relationship between tax and democracy is more ambiguous, sometimes positive but most often insignificant. This may reflect a greater complexity of causal processes between those two variables. An important finding is that this relationship happens to operate over the long term, i.e. results are stronger with estimators that focus on longer-term changes in composition of government revenue, rather than short-term variation. Finally, the paper has been made easy to be replicated in order to allow for future comparisons using the ICTD GRD.
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Taxation, Non-‐‑Tax Revenue and Democracy
Wilson Prichard Interna1onal Center for Tax and Development
Background • Large body of cross-‐country econometric studies of the poli1cal resource curse -‐ but conflic1ng results con1nue aAer more than a decade
• Why such inconsistency? § Imprecise indicators – most theories of resource curse focus on sources of government revenue as share of GDP, but most tests use total resource income
§ Problema2c and variable data – most studies use ‘custom’ datasets, many of which have major weaknesses
§ Inconsistent methods – and evidence that capturing complex poli1cal rela1onships using cross-‐country methods can be highly sensi1ve to methods
§ Do not dis2nguish alterna2ve causal pathways, linked to tax and non-‐tax revenue
Research Strategy 1. Be=er indicators – drawing on ICTD GRD allows us to
focus on government revenue from, respec1vely, non-‐resource taxes and non-‐tax revenue (primarily non-‐renewable natural resources)
2. Be=er data – Our data is more complete than earlier studies looking at government revenue
3. Mul2ple econometric methods -‐ Sys-‐GMM, Mean-‐Group, Random and Fixed Effects Logit, Error Correc1on Model
4. Test mul2ple pathways – tax reliance, total tax revenue, total non-‐tax revenue
Descriptive Data
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DNKDNKDNKDNKDNKDNKDNKDNKDNKDNKDNKDNKDNKDNKDNKDNKDNKDNKDNKDNKDNK
DOMDOMDOMDOMDOMDOMDOMDOMDOMDOMDOMDOMDOMDOMDOMDOMDOMDOMDOMDOMDOM
DZADZADZADZADZADZADZADZADZADZADZADZADZADZADZADZADZADZADZADZADZA
ECUECUECUECUECUECUECUECUECUECUECUECUECUECUECUECUECUECUECUECUECU
EGYEGYEGYEGYEGYEGYEGYEGYEGYEGYEGYEGYEGYEGYEGYEGYEGYEGYEGYEGYEGYERIERIERIERIERIERIERIERIERIERIERIERIERIERIERIERIERIERIERIERIERI
ESPESPESPESPESPESPESPESPESPESPESPESPESPESPESPESPESPESPESPESPESP
ESTESTESTESTESTESTESTESTESTESTESTESTESTESTESTESTESTESTESTESTEST
ETHETHETHETHETHETHETHETHETHETHETHETHETHETHETHETHETHETHETHETHETH
FINFINFINFINFINFINFINFINFINFINFINFINFINFINFINFINFINFINFINFINFIN
FJIFJIFJIFJIFJIFJIFJIFJIFJIFJIFJIFJIFJIFJIFJIFJIFJIFJIFJIFJIFJI
FRAFRAFRAFRAFRAFRAFRAFRAFRAFRAFRAFRAFRAFRAFRAFRAFRAFRAFRAFRAFRA
GABGABGABGABGABGABGABGABGABGABGABGABGABGABGABGABGABGABGABGABGAB
GBRGBRGBRGBRGBRGBRGBRGBRGBRGBRGBRGBRGBRGBRGBRGBRGBRGBRGBRGBRGBR
GEOGEOGEOGEOGEOGEOGEOGEOGEOGEOGEOGEOGEOGEOGEOGEOGEOGEOGEOGEOGEO
GHAGHAGHAGHAGHAGHAGHAGHAGHAGHAGHAGHAGHAGHAGHAGHAGHAGHAGHAGHAGHA
GINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGIN
GMBGMBGMBGMBGMBGMBGMBGMBGMBGMBGMBGMBGMBGMBGMBGMBGMBGMBGMBGMBGMBGNBGNBGNBGNBGNBGNBGNBGNBGNBGNBGNBGNBGNBGNBGNBGNBGNBGNBGNBGNBGNB
GNQGNQGNQGNQGNQGNQGNQGNQGNQGNQGNQGNQGNQGNQGNQGNQGNQGNQGNQGNQGNQ
GRCGRCGRCGRCGRCGRCGRCGRCGRCGRCGRCGRCGRCGRCGRCGRCGRCGRCGRCGRCGRC
GTMGTMGTMGTMGTMGTMGTMGTMGTMGTMGTMGTMGTMGTMGTMGTMGTMGTMGTMGTMGTM
GUYGUYGUYGUYGUYGUYGUYGUYGUYGUYGUYGUYGUYGUYGUYGUYGUYGUYGUYGUYGUY
HNDHNDHNDHNDHNDHNDHNDHNDHNDHNDHNDHNDHNDHNDHNDHNDHNDHNDHNDHNDHND
HRVHRVHRVHRVHRVHRVHRVHRVHRVHRVHRVHRVHRVHRVHRVHRVHRVHRVHRV
HTIHTIHTIHTIHTIHTIHTIHTIHTIHTIHTIHTIHTIHTIHTIHTIHTIHTIHTIHTIHTI
HUNHUNHUNHUNHUNHUNHUNHUNHUNHUNHUNHUNHUNHUNHUNHUNHUNHUN
IDNIDNIDNIDNIDNIDNIDNIDNIDNIDNIDNIDNIDNIDNIDNIDNIDNIDNIDNIDNIDN
INDINDINDINDINDINDINDINDINDINDINDINDINDINDINDINDINDINDINDINDINDIRLIRLIRLIRLIRLIRLIRLIRLIRLIRLIRLIRLIRLIRLIRLIRLIRLIRLIRLIRLIRL
IRNIRNIRNIRNIRNIRNIRNIRNIRNIRNIRNIRNIRNIRNIRNIRNIRNIRNIRNIRNIRN
IRQIRQIRQIRQIRQIRQIRQIRQIRQIRQIRQIRQIRQIRQIRQIRQIRQIRQIRQIRQIRQ
ISRISRISRISRISRISRISRISRISRISRISRISRISRISRISRISRISRISRISRISRISRITAITAITAITAITAITAITAITAITAITAITAITAITAITAITAITAITAITAITAITAITAJAMJAMJAMJAMJAMJAMJAMJAMJAMJAMJAMJAMJAMJAMJAMJAMJAMJAMJAMJAMJAM
JORJORJORJORJORJORJORJORJORJORJORJORJORJORJORJORJORJORJORJORJOR
JPNJPNJPNJPNJPNJPNJPNJPNJPNJPNJPNJPNJPNJPNJPNJPNJPNJPNJPNJPNJPN
KAZKAZKAZKAZKAZKAZKAZKAZKAZKAZKAZKAZKAZKAZKAZKAZKAZ
KENKENKENKENKENKENKENKENKENKENKENKENKENKENKENKENKENKENKENKENKENKGZKGZKGZKGZKGZKGZKGZKGZKGZKGZKGZKGZKGZKGZKGZKGZKGZ
KHMKHMKHMKHMKHMKHMKHMKHMKHMKHMKHMKHMKHMKHMKHMKHMKHMKHMKHMKHMKHM
KORKORKORKORKORKORKORKORKORKORKORKORKORKORKORKORKORKORKORKORKOR
KSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSV
KWTKWTKWTKWTKWTKWTKWTKWTKWTKWTKWTKWTKWTKWTKWTKWTKWTKWTKWTKWTKWTLAOLAOLAOLAOLAOLAOLAOLAOLAOLAOLAOLAOLAOLAOLAOLAOLAOLAOLAOLAOLAO
LBNLBNLBNLBNLBNLBNLBNLBNLBNLBNLBNLBNLBNLBNLBNLBNLBNLBNLBNLBNLBN
LBRLBRLBRLBRLBRLBRLBRLBRLBRLBRLBRLBRLBRLBRLBRLBRLBRLBRLBRLBRLBR
LBYLBYLBYLBYLBYLBYLBYLBYLBYLBYLBYLBYLBYLBYLBYLBYLBYLBYLBYLBYLBY
LKALKALKALKALKALKALKALKALKALKALKALKALKALKALKALKALKALKALKALKALKA
LSOLSOLSOLSOLSOLSOLSOLSOLSOLSOLSOLSOLSOLSOLSOLSOLSOLSOLSOLSOLSO
LTULTULTULTULTULTULTULTULTULTULTULTULTULTULTULTULTULTU
LVALVALVALVALVALVALVALVALVALVALVALVALVALVALVALVALVALVALVA
MARMARMARMARMARMARMARMARMARMARMARMARMARMARMARMARMARMARMARMARMAR
MDAMDAMDAMDAMDAMDAMDAMDAMDAMDAMDAMDAMDAMDAMDAMDA
MDGMDGMDGMDGMDGMDGMDGMDGMDGMDGMDGMDGMDGMDGMDGMDGMDGMDGMDGMDGMDGMEXMEXMEXMEXMEXMEXMEXMEXMEXMEXMEXMEXMEXMEXMEXMEXMEXMEXMEXMEXMEX
MKDMKDMKDMKDMKDMKDMKDMKDMKDMKDMKDMKDMKDMKDMKDMKDMKDMKDMKDMKDMKD
MLIMLIMLIMLIMLIMLIMLIMLIMLIMLIMLIMLIMLIMLIMLIMLIMLIMLIMLIMLIMLI
MMRMMRMMRMMRMMRMMRMMRMMRMMRMMRMMRMMRMMRMMRMMRMMRMMRMMRMMRMMRMMR
MNEMNEMNEMNEMNEMNEMNEMNEMNEMNEMNEMNEMNEMNEMNEMNEMNEMNEMNEMNEMNE
MNGMNGMNGMNGMNGMNGMNGMNGMNGMNGMNGMNGMNGMNGMNGMNG
MOZMOZMOZMOZMOZMOZMOZMOZMOZMOZMOZMOZMOZMOZMOZMOZMOZMOZMOZMOZMOZ
MRTMRTMRTMRTMRTMRTMRTMRTMRTMRTMRTMRTMRTMRTMRTMRTMRTMRTMRTMRTMRT
MUSMUSMUSMUSMUSMUSMUSMUSMUSMUSMUSMUSMUSMUSMUSMUSMUSMUSMUSMUSMUS
MWIMWIMWIMWIMWIMWIMWIMWIMWIMWIMWIMWIMWIMWIMWIMWIMWIMWIMWIMWIMWI
MYSMYSMYSMYSMYSMYSMYSMYSMYSMYSMYSMYSMYSMYSMYSMYSMYSMYSMYS
NAMNAMNAMNAMNAMNAMNAMNAMNAMNAMNAMNAMNAMNAMNAMNAMNAMNAMNAMNAM
NERNERNERNERNERNERNERNERNERNERNERNERNERNERNERNERNERNERNERNERNERNGANGANGANGANGANGANGANGANGANGANGANGANGANGANGANGANGANGANGANGANGA
NICNICNICNICNICNICNICNICNICNICNICNICNICNICNICNICNICNICNICNICNIC
NLDNLDNLDNLDNLDNLDNLDNLDNLDNLDNLDNLDNLDNLDNLDNLDNLDNLDNLDNLDNLDNORNORNORNORNORNORNORNORNORNORNORNORNORNORNORNORNORNORNORNORNOR
NPLNPLNPLNPLNPLNPLNPLNPLNPLNPLNPLNPLNPLNPLNPLNPLNPLNPLNPLNPLNPL
NZLNZLNZLNZLNZLNZLNZLNZLNZLNZLNZLNZLNZLNZLNZLNZLNZLNZLNZLNZLNZL
PAKPAKPAKPAKPAKPAKPAKPAKPAKPAKPAKPAKPAKPAKPAKPAKPAKPAKPAKPAKPAK
PANPANPANPANPANPANPANPANPANPANPANPANPANPANPANPANPANPANPANPANPANPERPERPERPERPERPERPERPERPERPERPERPERPERPERPHLPHLPHLPHLPHLPHLPHLPHLPHLPHLPHLPHLPHLPHLPHLPHLPHLPHLPHLPHLPHLPNGPNGPNGPNGPNGPNGPNGPNGPNGPNGPNGPNGPNGPNGPNGPNGPNGPNGPNGPNGPNG
POLPOLPOLPOLPOLPOLPOLPOLPOLPOLPOLPOLPOLPOLPOLPOLPOL
PRTPRTPRTPRTPRTPRTPRTPRTPRTPRTPRTPRTPRTPRTPRTPRTPRTPRTPRTPRTPRT
PRYPRYPRYPRYPRYPRYPRYPRYPRYPRYPRYPRYPRYPRYPRYPRYPRYPRYPRYPRYPRY
QATQATQATQATQATQATQATQATQATQATQATQATQATQATQATQATQATQATQATQATQAT
ROMROMROMROMROMROMROMROMROMROMROMROMROMROMROMROMROM RUSRUSRUSRUSRUSRUSRUSRUSRUSRUSRUSRUSRUSRUSRUSRUSRUSRUSRUSRUS
RWARWARWARWARWARWARWARWARWARWARWARWARWARWARWARWARWARWARWARWARWA
SAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAU
SDNSDNSDNSDNSDNSDNSDNSDNSDNSDNSDNSDNSDNSDNSDNSDNSDNSDNSDNSDNSDN
SENSENSENSENSENSENSENSENSENSENSENSENSENSENSENSENSENSENSENSENSEN
SGPSGPSGPSGPSGPSGPSGPSGPSGPSGPSGPSGPSGPSGPSGPSGPSGPSGPSGPSGPSGP
SLBSLBSLBSLBSLBSLBSLBSLBSLBSLBSLBSLBSLBSLBSLBSLBSLBSLBSLBSLBSLB
SLESLESLESLESLESLESLESLESLESLESLESLESLESLESLESLESLESLESLESLESLE
SLVSLVSLVSLVSLVSLVSLVSLVSLVSLVSLVSLVSLVSLVSLVSLVSLVSLVSLVSLVSLV SRBSRBSRBSRBSRBSRBSRBSRBSRBSRBSRBSRBSRBSRBSRBSRBSRBSRBSRBSRBSRBSURSURSURSURSURSURSURSURSURSUR
SVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVNSVNSVNSVNSVNSVNSVNSVNSVNSVNSVNSVNSVNSVNSVNSVNSVNSVNSVNSVNSVN SWESWESWESWESWESWESWESWESWESWESWESWESWESWESWESWESWESWESWESWESWE
SWZSWZSWZSWZSWZSWZSWZSWZSWZSWZSWZSWZSWZSWZSWZSWZSWZSWZSWZSWZSWZSYRSYRSYRSYRSYRSYRSYRSYRSYRSYRSYRSYRSYRSYRSYRSYRSYRSYRSYRSYRSYR
TCDTCDTCDTCDTCDTCDTCDTCDTCDTCDTCDTCDTCDTCDTCDTCDTCDTCDTCDTCDTCDTGOTGOTGOTGOTGOTGOTGOTGOTGOTGOTGOTGOTGOTGOTGOTGOTGOTGOTGOTGOTGO
THATHATHATHATHATHATHATHATHATHATHATHATHATHATHATHATHATHATHATHATHA
TJKTJKTJKTJKTJKTJKTJKTJKTJKTJKTJKTJKTJKTJKTJKTJKTJKTJKTJKTJKTJK
TKMTKMTKMTKMTKMTKMTKMTKMTKMTKMTKMTKMTKMTKMTKMTKMTKMTKMTKM
TMPTMPTMPTMPTMPTMPTMPTMPTMPTMPTMPTMPTMPTMPTMPTMPTMPTMPTMPTMPTMP
TTOTTOTTOTTOTTOTTOTTOTTOTTOTTOTTOTTOTTOTTOTTOTTOTTOTTOTTOTTOTTO
TUNTUNTUNTUNTUNTUNTUNTUNTUNTUNTUNTUNTUNTUNTUNTUNTUNTUNTUNTUNTUN
TURTURTURTURTURTURTURTURTURTURTURTURTURTURTURTURTURTURTURTURTUR
TZATZATZATZATZATZATZATZATZATZATZATZATZATZATZATZATZATZATZATZATZAUGAUGAUGAUGAUGAUGAUGAUGAUGAUGAUGAUGAUGAUGAUGAUGAUGAUGAUGAUGAUGA
UKRUKRUKRUKRUKRUKRUKRUKRUKRUKRUKRUKRUKRUKRUKRUKRUKRURYURYURYURYURYURYURYURYURYURYURYURYURYURYURYURYURYURYURYURYURY
USAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSA
UZBUZBUZBUZBUZBUZBUZBUZBUZBUZBUZBUZBUZBUZBUZBUZBUZB
VENVENVENVENVENVENVENVENVENVENVENVENVENVENVENVENVENVENVENVENVEN
VNMVNMVNMVNMVNMVNMVNMVNMVNMVNMVNMVNMVNMVNMVNMVNMVNMVNMVNMVNM
YEMYEMYEMYEMYEMYEMYEMYEMYEMYEMYEMYEMYEMYEMYEMYEMYEMYEMYEMYEMYEM
ZAFZAFZAFZAFZAFZAFZAFZAFZAFZAFZAFZAFZAFZAFZAFZAFZAFZAFZAFZAFZAF
ZARZARZARZARZARZARZARZARZARZARZARZARZARZARZARZARZARZARZARZARZARZMBZMBZMBZMBZMBZMBZMBZMBZMBZMBZMBZMBZMB
ZWEZWEZWEZWEZWEZWEZWEZWEZWEZWEZWEZWEZWEZWEZWEZWEZWEZWEZWEZWEZWE
020
4060
8010
012
0Le
vel o
f Dec
mor
acy
(Pol
ity2)
0 10 20 30 40 50Total Tax Revenue as % of GDP
Total Tax Revenue and Polity, 1990-2010
AFGAFGAFGAFGAFGAFGAFGAFGAFGAFGAFGAFGAFGAFGAFGAFGAFGAFGAFGAFGAFGAGOAGOAGOAGOAGOAGOAGOAGOAGOAGOAGOAGOAGOAGOAGOAGOAGOAGOAGOAGO
ALBALBALBALBALBALBALBALBALBALBALBALBALBALBALBALBALBALBALB
AREAREAREAREAREAREAREAREAREAREAREAREAREARE
ARGARGARGARGARGARGARGARGARGARGARGARGARGARGARGARGARGARGARGARGARG
ARMARMARMARMARMARMARMARMARMARMARMARMARMARMARMARMARM
AUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUTAUTAUTAUTAUTAUTAUTAUTAUTAUTAUTAUTAUTAUTAUTAUTAUTAUTAUTAUTAUT
AZEAZEAZEAZEAZEAZEAZEAZEAZEAZEAZEAZEAZEAZEAZEAZEAZEAZEAZE
BDIBDIBDIBDIBDIBDIBDIBDIBDIBDIBDIBDIBDIBDIBDIBDIBDIBDIBDIBDIBDI
BELBELBELBELBELBELBELBELBELBELBELBELBELBELBELBELBELBELBELBELBEL
BENBENBENBENBENBENBENBENBENBENBENBENBENBENBENBENBENBENBENBENBEN
BFABFABFABFABFABFABFABFABFABFABFABFABFABFABFABFABFABFABFABFABFA
BGDBGDBGDBGDBGDBGDBGDBGDBGDBGDBGDBGDBGDBGDBGDBGDBGDBGDBGDBGDBGD
BGRBGRBGRBGRBGRBGRBGRBGRBGRBGRBGRBGRBGRBGRBGR
BHRBHRBHRBHRBHRBHRBHRBHRBHRBHRBHRBHRBHRBHRBHRBHRBHRBHRBHRBHRBHR
BIHBIHBIHBIHBIHBIHBIHBIHBIHBIHBIHBIHBIHBIHBIHBIHBIHBIHBIHBIHBIH
BLRBLRBLRBLRBLRBLRBLRBLRBLRBLRBLRBLRBLRBLRBLRBLRBLR
BOLBOLBOLBOLBOLBOLBOLBOLBOLBOLBOLBOLBOLBOLBOLBOLBOLBOLBOLBOLBOL
BRABRABRABRABRABRABRABRABRABRABRABRABRABRABRABRABRABRABRABRABRA
BTNBTNBTNBTNBTNBTNBTNBTNBTNBTNBTNBTNBTNBTNBTNBTNBTNBTNBTNBTNBTN
BWABWABWABWABWABWABWABWABWABWABWABWABWABWABWABWABWABWABWABWABWA
CAFCAFCAFCAFCAFCAFCAFCAFCAFCAFCAFCAFCAFCAFCAFCAFCAFCAFCAFCAFCAF
CANCANCANCANCANCANCANCANCANCANCANCANCANCANCANCANCANCANCANCANCANCHECHECHECHECHECHECHECHECHECHECHECHECHECHECHECHECHECHECHECHECHE
CHLCHLCHLCHLCHLCHLCHLCHLCHLCHLCHLCHLCHLCHLCHLCHLCHLCHLCHLCHLCHL
CHNCHNCHNCHNCHNCHNCHNCHNCHNCHNCHNCHNCHNCHNCHNCHNCHNCHNCHNCHNCHN
CIVCIVCIVCIVCIVCIVCIVCIVCIVCIVCIVCIVCIVCIVCIVCIVCIVCIVCIVCIVCIVCMRCMRCMRCMRCMRCMRCMRCMRCMRCMRCMRCMRCMRCMRCMRCMRCMRCMRCMRCMRCMR
COGCOGCOGCOGCOGCOGCOGCOGCOGCOGCOGCOGCOGCOGCOGCOGCOGCOGCOGCOGCOG
COLCOLCOLCOLCOLCOLCOLCOLCOLCOLCOLCOLCOLCOLCOLCOLCOLCOLCOLCOLCOL
COMCOMCOMCOMCOMCOMCOMCOMCOMCOMCOMCOMCOMCOMCOMCOMCOMCOMCOMCOMCOM
CPVCPVCPVCPVCPVCPVCPVCPVCPVCPVCPVCPVCPVCPVCPVCPVCPVCPVCPVCPVCPV
CRICRICRICRICRICRICRICRICRICRICRICRICRICRICRICRICRICRICRICRICRICYPCYPCYPCYPCYPCYPCYPCYPCYPCYPCYPCYPCYPCYPCYPCYPCYPCYPCYPCYPCYPCZECZECZECZECZECZECZECZECZECZECZECZECZECZECZECZECZECZE
DEUDEUDEUDEUDEUDEUDEUDEUDEUDEUDEUDEUDEUDEUDEUDEUDEUDEUDEUDEUDEU
DJIDJIDJIDJIDJIDJIDJIDJIDJIDJIDJIDJIDJIDJIDJIDJIDJIDJIDJIDJIDJI
DNKDNKDNKDNKDNKDNKDNKDNKDNKDNKDNKDNKDNKDNKDNKDNKDNKDNKDNKDNKDNK
DOMDOMDOMDOMDOMDOMDOMDOMDOMDOMDOMDOMDOMDOMDOMDOMDOMDOMDOMDOMDOM
DZADZADZADZADZADZADZADZADZADZADZADZADZADZADZADZADZADZADZADZADZA
ECUECUECUECUECUECUECUECUECUECUECUECUECUECUECUECUECUECUECUECUECU
EGYEGYEGYEGYEGYEGYEGYEGYEGYEGYEGYEGYEGYEGYEGYEGYEGYEGYEGYEGYEGYERIERIERIERIERIERIERIERIERIERIERIERIERIERIERIERIERIERIERIERIERI
ESPESPESPESPESPESPESPESPESPESPESPESPESPESPESPESPESPESPESPESPESP
ESTESTESTESTESTESTESTESTESTESTESTESTESTESTESTESTESTESTESTESTEST
ETHETHETHETHETHETHETHETHETHETHETHETHETHETHETHETHETHETHETHETHETH
FINFINFINFINFINFINFINFINFINFINFINFINFINFINFINFINFINFINFINFINFIN
FJIFJIFJIFJIFJIFJIFJIFJIFJIFJIFJIFJIFJIFJIFJIFJIFJIFJIFJIFJIFJI
FRAFRAFRAFRAFRAFRAFRAFRAFRAFRAFRAFRAFRAFRAFRAFRAFRAFRAFRAFRAFRA
GABGABGABGABGABGABGABGABGABGABGABGABGABGABGABGABGABGABGABGABGAB
GBRGBRGBRGBRGBRGBRGBRGBRGBRGBRGBRGBRGBRGBRGBRGBRGBRGBRGBRGBRGBR
GEOGEOGEOGEOGEOGEOGEOGEOGEOGEOGEOGEOGEOGEOGEOGEOGEOGEOGEOGEOGEO
GHAGHAGHAGHAGHAGHAGHAGHAGHAGHAGHAGHAGHAGHAGHAGHAGHAGHAGHAGHAGHA
GINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGINGIN
GMBGMBGMBGMBGMBGMBGMBGMBGMBGMBGMBGMBGMBGMBGMBGMBGMBGMBGMBGMBGMBGNBGNBGNBGNBGNBGNBGNBGNBGNBGNBGNBGNBGNBGNBGNBGNBGNBGNBGNBGNBGNB
GNQGNQGNQGNQGNQGNQGNQGNQGNQGNQGNQGNQGNQGNQGNQGNQGNQGNQGNQGNQGNQ
GRCGRCGRCGRCGRCGRCGRCGRCGRCGRCGRCGRCGRCGRCGRCGRCGRCGRCGRCGRCGRC
GTMGTMGTMGTMGTMGTMGTMGTMGTMGTMGTMGTMGTMGTMGTMGTMGTMGTMGTMGTMGTM
GUYGUYGUYGUYGUYGUYGUYGUYGUYGUYGUYGUYGUYGUYGUYGUYGUYGUYGUYGUYGUY
HNDHNDHNDHNDHNDHNDHNDHNDHNDHNDHNDHNDHNDHNDHNDHNDHNDHNDHNDHNDHND
HRVHRVHRVHRVHRVHRVHRVHRVHRVHRVHRVHRVHRVHRVHRVHRVHRVHRVHRV
HTIHTIHTIHTIHTIHTIHTIHTIHTIHTIHTIHTIHTIHTIHTIHTIHTIHTIHTIHTIHTI
HUNHUNHUNHUNHUNHUNHUNHUNHUNHUNHUNHUNHUNHUNHUNHUNHUNHUN
IDNIDNIDNIDNIDNIDNIDNIDNIDNIDNIDNIDNIDNIDNIDNIDNIDNIDNIDNIDNIDN
INDINDINDINDINDINDINDINDINDINDINDINDINDINDINDINDINDINDINDINDIND
IRLIRLIRLIRLIRLIRLIRLIRLIRLIRLIRLIRLIRLIRLIRLIRLIRLIRLIRLIRLIRL
IRNIRNIRNIRNIRNIRNIRNIRNIRNIRNIRNIRNIRNIRNIRNIRNIRNIRNIRNIRNIRN
IRQIRQIRQIRQIRQIRQIRQIRQIRQIRQIRQIRQIRQIRQIRQIRQIRQIRQIRQIRQIRQ
ISRISRISRISRISRISRISRISRISRISRISRISRISRISRISRISRISRISRISRISRISRITAITAITAITAITAITAITAITAITAITAITAITAITAITAITAITAITAITAITAITAITAJAMJAMJAMJAMJAMJAMJAMJAMJAMJAMJAMJAMJAMJAMJAMJAMJAMJAMJAMJAMJAM
JORJORJORJORJORJORJORJORJORJORJORJORJORJORJORJORJORJORJORJORJOR
JPNJPNJPNJPNJPNJPNJPNJPNJPNJPNJPNJPNJPNJPNJPNJPNJPNJPNJPNJPNJPN
KAZKAZKAZKAZKAZKAZKAZKAZKAZKAZKAZKAZKAZKAZKAZKAZKAZ
KENKENKENKENKENKENKENKENKENKENKENKENKENKENKENKENKENKENKENKENKENKGZKGZKGZKGZKGZKGZKGZKGZKGZKGZKGZKGZKGZKGZKGZKGZKGZ
KHMKHMKHMKHMKHMKHMKHMKHMKHMKHMKHMKHMKHMKHMKHMKHMKHMKHMKHMKHMKHM
KORKORKORKORKORKORKORKORKORKORKORKORKORKORKORKORKORKORKORKORKOR
KSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSV
KWTKWTKWTKWTKWTKWTKWTKWTKWTKWTKWTKWTKWTKWTKWTKWTKWTKWTKWTKWTKWTLAOLAOLAOLAOLAOLAOLAOLAOLAOLAOLAOLAOLAOLAOLAOLAOLAOLAOLAOLAOLAO
LBNLBNLBNLBNLBNLBNLBNLBNLBNLBNLBNLBNLBNLBNLBNLBNLBNLBNLBNLBNLBN
LBRLBRLBRLBRLBRLBRLBRLBRLBRLBRLBRLBRLBRLBRLBRLBRLBRLBRLBRLBRLBR
LBYLBYLBYLBYLBYLBYLBYLBYLBYLBYLBYLBYLBYLBYLBYLBYLBYLBYLBYLBYLBY
LKALKALKALKALKALKALKALKALKALKALKALKALKALKALKALKALKALKALKALKALKA
LSOLSOLSOLSOLSOLSOLSOLSOLSOLSOLSOLSOLSOLSOLSOLSOLSOLSOLSOLSOLSO
LTULTULTULTULTULTULTULTULTULTULTULTULTULTULTULTULTULTU
LVALVALVALVALVALVALVALVALVALVALVALVALVALVALVALVALVALVALVA
MARMARMARMARMARMARMARMARMARMARMARMARMARMARMARMARMARMARMARMARMAR
MDAMDAMDAMDAMDAMDAMDAMDAMDAMDAMDAMDAMDAMDAMDAMDA
MDGMDGMDGMDGMDGMDGMDGMDGMDGMDGMDGMDGMDGMDGMDGMDGMDGMDGMDGMDGMDGMEXMEXMEXMEXMEXMEXMEXMEXMEXMEXMEXMEXMEXMEXMEXMEXMEXMEXMEXMEXMEX
MKDMKDMKDMKDMKDMKDMKDMKDMKDMKDMKDMKDMKDMKDMKDMKDMKDMKDMKDMKDMKD
MLIMLIMLIMLIMLIMLIMLIMLIMLIMLIMLIMLIMLIMLIMLIMLIMLIMLIMLIMLIMLI
MMRMMRMMRMMRMMRMMRMMRMMRMMRMMRMMRMMRMMRMMRMMRMMRMMRMMRMMRMMRMMR
MNEMNEMNEMNEMNEMNEMNEMNEMNEMNEMNEMNEMNEMNEMNEMNEMNEMNEMNEMNEMNE
MNGMNGMNGMNGMNGMNGMNGMNGMNGMNGMNGMNGMNGMNGMNGMNG
MOZMOZMOZMOZMOZMOZMOZMOZMOZMOZMOZMOZMOZMOZMOZMOZMOZMOZMOZMOZMOZ
MRTMRTMRTMRTMRTMRTMRTMRTMRTMRTMRTMRTMRTMRTMRTMRTMRTMRTMRTMRTMRT
MUSMUSMUSMUSMUSMUSMUSMUSMUSMUSMUSMUSMUSMUSMUSMUSMUSMUSMUSMUSMUS
MWIMWIMWIMWIMWIMWIMWIMWIMWIMWIMWIMWIMWIMWIMWIMWIMWIMWIMWIMWIMWI
MYSMYSMYSMYSMYSMYSMYSMYSMYSMYSMYSMYSMYSMYSMYSMYSMYSMYSMYS
NAMNAMNAMNAMNAMNAMNAMNAMNAMNAMNAMNAMNAMNAMNAMNAMNAMNAMNAMNAM
NERNERNERNERNERNERNERNERNERNERNERNERNERNERNERNERNERNERNERNERNER NGANGANGANGANGANGANGANGANGANGANGANGANGANGANGANGANGANGANGANGANGA
NICNICNICNICNICNICNICNICNICNICNICNICNICNICNICNICNICNICNICNICNIC
NLDNLDNLDNLDNLDNLDNLDNLDNLDNLDNLDNLDNLDNLDNLDNLDNLDNLDNLDNLDNLDNORNORNORNORNORNORNORNORNORNORNORNORNORNORNORNORNORNORNORNORNOR
NPLNPLNPLNPLNPLNPLNPLNPLNPLNPLNPLNPLNPLNPLNPLNPLNPLNPLNPLNPLNPL
NZLNZLNZLNZLNZLNZLNZLNZLNZLNZLNZLNZLNZLNZLNZLNZLNZLNZLNZLNZLNZL
PAKPAKPAKPAKPAKPAKPAKPAKPAKPAKPAKPAKPAKPAKPAKPAKPAKPAKPAKPAKPAK
PANPANPANPANPANPANPANPANPANPANPANPANPANPANPANPANPANPANPANPANPANPERPERPERPERPERPERPERPERPERPERPERPERPERPERPHLPHLPHLPHLPHLPHLPHLPHLPHLPHLPHLPHLPHLPHLPHLPHLPHLPHLPHLPHLPHLPNGPNGPNGPNGPNGPNGPNGPNGPNGPNGPNGPNGPNGPNGPNGPNGPNGPNGPNGPNGPNG
POLPOLPOLPOLPOLPOLPOLPOLPOLPOLPOLPOLPOLPOLPOLPOLPOL
PRTPRTPRTPRTPRTPRTPRTPRTPRTPRTPRTPRTPRTPRTPRTPRTPRTPRTPRTPRTPRT
PRYPRYPRYPRYPRYPRYPRYPRYPRYPRYPRYPRYPRYPRYPRYPRYPRYPRYPRYPRYPRY
QATQATQATQATQATQATQATQATQATQATQATQATQATQATQATQATQATQATQATQATQAT
ROMROMROMROMROMROMROMROMROMROMROMROMROMROMROMROMROM RUSRUSRUSRUSRUSRUSRUSRUSRUSRUSRUSRUSRUSRUSRUSRUSRUSRUSRUSRUS
RWARWARWARWARWARWARWARWARWARWARWARWARWARWARWARWARWARWARWARWARWA
SAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAU
SDNSDNSDNSDNSDNSDNSDNSDNSDNSDNSDNSDNSDNSDNSDNSDNSDNSDNSDNSDNSDN
SENSENSENSENSENSENSENSENSENSENSENSENSENSENSENSENSENSENSENSENSEN
SGPSGPSGPSGPSGPSGPSGPSGPSGPSGPSGPSGPSGPSGPSGPSGPSGPSGPSGPSGPSGP
SLBSLBSLBSLBSLBSLBSLBSLBSLBSLBSLBSLBSLBSLBSLBSLBSLBSLBSLBSLBSLB
SLESLESLESLESLESLESLESLESLESLESLESLESLESLESLESLESLESLESLESLESLE
SLVSLVSLVSLVSLVSLVSLVSLVSLVSLVSLVSLVSLVSLVSLVSLVSLVSLVSLVSLVSLV SRBSRBSRBSRBSRBSRBSRBSRBSRBSRBSRBSRBSRBSRBSRBSRBSRBSRBSRBSRBSRBSURSURSURSURSURSURSURSURSURSUR
SVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVKSVNSVNSVNSVNSVNSVNSVNSVNSVNSVNSVNSVNSVNSVNSVNSVNSVNSVNSVNSVNSVN SWESWESWESWESWESWESWESWESWESWESWESWESWESWESWESWESWESWESWESWESWE
SWZSWZSWZSWZSWZSWZSWZSWZSWZSWZSWZSWZSWZSWZSWZSWZSWZSWZSWZSWZSWZSYRSYRSYRSYRSYRSYRSYRSYRSYRSYRSYRSYRSYRSYRSYRSYRSYRSYRSYRSYRSYR
TCDTCDTCDTCDTCDTCDTCDTCDTCDTCDTCDTCDTCDTCDTCDTCDTCDTCDTCDTCDTCDTGOTGOTGOTGOTGOTGOTGOTGOTGOTGOTGOTGOTGOTGOTGOTGOTGOTGOTGOTGOTGO
THATHATHATHATHATHATHATHATHATHATHATHATHATHATHATHATHATHATHATHATHA
TJKTJKTJKTJKTJKTJKTJKTJKTJKTJKTJKTJKTJKTJKTJKTJKTJKTJKTJKTJKTJK
TKMTKMTKMTKMTKMTKMTKMTKMTKMTKMTKMTKMTKMTKMTKMTKMTKMTKMTKM
TMPTMPTMPTMPTMPTMPTMPTMPTMPTMPTMPTMPTMPTMPTMPTMPTMPTMPTMPTMPTMP
TTOTTOTTOTTOTTOTTOTTOTTOTTOTTOTTOTTOTTOTTOTTOTTOTTOTTOTTOTTOTTO
TUNTUNTUNTUNTUNTUNTUNTUNTUNTUNTUNTUNTUNTUNTUNTUNTUNTUNTUNTUNTUN
TURTURTURTURTURTURTURTURTURTURTURTURTURTURTURTURTURTURTURTURTUR
TZATZATZATZATZATZATZATZATZATZATZATZATZATZATZATZATZATZATZATZATZAUGAUGAUGAUGAUGAUGAUGAUGAUGAUGAUGAUGAUGAUGAUGAUGAUGAUGAUGAUGAUGA
UKRUKRUKRUKRUKRUKRUKRUKRUKRUKRUKRUKRUKRUKRUKRUKRUKRURYURYURYURYURYURYURYURYURYURYURYURYURYURYURYURYURYURYURYURYURY
USAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSAUSA
UZBUZBUZBUZBUZBUZBUZBUZBUZBUZBUZBUZBUZBUZBUZBUZBUZB
VENVENVENVENVENVENVENVENVENVENVENVENVENVENVENVENVENVENVENVENVEN
VNMVNMVNMVNMVNMVNMVNMVNMVNMVNMVNMVNMVNMVNMVNMVNMVNMVNMVNMVNM
YEMYEMYEMYEMYEMYEMYEMYEMYEMYEMYEMYEMYEMYEMYEMYEMYEMYEMYEMYEMYEM
ZAFZAFZAFZAFZAFZAFZAFZAFZAFZAFZAFZAFZAFZAFZAFZAFZAFZAFZAFZAFZAF
ZARZARZARZARZARZARZARZARZARZARZARZARZARZARZARZARZARZARZARZARZARZMBZMBZMBZMBZMBZMBZMBZMBZMBZMBZMBZMBZMB
ZWEZWEZWEZWEZWEZWEZWEZWEZWEZWEZWEZWEZWEZWEZWEZWEZWEZWEZWEZWEZWE
020
4060
8010
0Le
vel o
f Dec
mor
acy
(Pol
ity2)
0 20 40 60 80Total Tax Collection as % of GDP
Total Non Tax Revenue and Polity, 1990-2010
Model Specification • Data from ICTD GRD 1990-‐2010, to maximize completeness and accuracy
• Three independent variables: tax reliance (tax/total rev), total tax % of GDP, total non-‐tax % of GDP
• Dependent variable is democracy: Con1nuous variable based on Polity IV for Sys-‐GMM, MG and ECM es1mates, binary variable based on Cheibub et al. 2010
• Controls from earlier studies: Log GDP, Civil War, Democra1c Diffusion, Growth per capita, popula1on size
Core Results Sys-‐GMM
Sys-‐GMM
CCE-‐MG CCE-‐MG FE Logit FE Logit RE Logit RE Logit ECM ECM
Tax_Rel 15.87*** 20.60*** 7.66** 1.51 10.34
(5.26) (7.62) (3.3890) (1.04) (10.45)
Total Tax -25.56* 51.76 21.69 -6.27* -34.38
(15.22) (35.15) (15.80) (3.74) (26.86)
Total Non-‐tax -29.8*** -155.2** -15.05 -12.59**
-36.0***
(10.1) (66.4) (10.09) (5.36) (13.25)
Groups 152 152 149 144 28 28 157 157 153 153
Obs 2536 2536 2634 2604 458 458 2305 2305 2539 2539
Core Results Sys-‐GMM
Sys-‐GMM
CCE-‐MG CCE-‐MG FE Logit FE Logit RE Logit RE Logit ECM ECM
Tax_Rel 15.87*** 20.60*** 7.66** 1.51 10.34
(5.26) (7.62) (3.3890) (1.04) (10.45)
Total Tax -25.56* 51.76 21.69 -6.27* -34.38
(15.22) (35.15) (15.80) (3.74) (26.86)
Total Non-‐tax -29.8*** -155.2** -15.05 -12.59**
-36.0***
(10.1) (66.4) (10.09) (5.36) (13.25)
Groups 152 152 149 144 28 28 157 157 153 153
Obs 2536 2536 2634 2604 458 458 2305 2305 2539 2539
Core Results Sys-‐GMM
Sys-‐GMM
CCE-‐MG CCE-‐MG FE Logit FE Logit RE Logit RE Logit ECM ECM
Tax_Rel 15.87*** 20.60*** 7.66** 1.51 10.34
(5.26) (7.62) (3.3890) (1.04) (10.45)
Total Tax -25.56* 51.76 21.69 -6.27* -34.38
(15.22) (35.15) (15.80) (3.74) (26.86)
Total Non-‐tax -29.8*** -155.2** -15.05 -12.59**
-36.0***
(10.1) (66.4) (10.09) (5.36) (13.25)
Groups 152 152 149 144 28 28 157 157 153 153
Obs 2536 2536 2634 2604 458 458 2305 2305 2539 2539
Robustness Checks Tests Results
Longer Lags on Revenue Variables More significant and higher magnitude – including the disappearance of nega1ve coefficients on the total tax variable for Sys-‐GMM and RE Logit
Alterna1ve measures of democracy Significant in most specifica1ons, but not for MG es1mator
Different country groups Results weakened, but generally s1ll significant, without OPEC. Results stronger without OECD.
Different Time Periods Results gradually lose significant going back to 1980, consistent with lower quality data and the rela1onship becoming stronger over 1me
Central government data All significant, but magnitude and significance diminished with less good data
Conclusions Strong evidence of resource curse: Nega1ve impact of either tax reliance or non-‐tax revenue on democracy in all specifica1ons and methods Ambiguous evidence on tax and democracy: Rela1onship is some1mes posi1ve, but most oAen insignificant. May reflect greater complexity of causal processes. Rela2onship operates in levels, not year-‐to-‐year varia2on: Results are stronger with es1mators that focus on longer-‐term changes in composi1on of government revenue, rather than short-‐term varia1on. Be=er Data Ma=ers: All results are much stronger using ICTD Government Revenue Data than when using Haber and Menaldo data on resource income, and post-‐1990 data that accounts for federal states. Cau2on and Transparency are Key: Different methods yield significant vola1lity, as do different data, making comprehensive, transparent, approached cri1cal
Marginal Effects from RE Logit
Results with three and five year lags Sys-‐GMM (3)
Sys-‐GMM (5)
Sys-‐GMM (3)
Sys-‐GMM (5)
RE Logit (3)
FE Logit (5)
RE Logit (3)
RE Logit (5)
Tax_Rel 19.4390** 23.8694** 4.4561*** 7.2327***
(7.9695) (10.0033) (1.6442) (2.0780)
Total Tax 7.0397 22.2667 -2.3642 7.8482
(31.2309) (39.0345) (5.0183) (6.7844)
Total Non-‐tax
-39.0786** -35.7187 -16.4260*** -20.2697***
(17.1580) (32.7934) (5.7189) (6.9277)
Groups 155 152 155 152 156 152 156 152
Obs 2308 2024 2308 2024 2025 1730 2025 1730