NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Globalization and Developing Countries - A Shrinking Tax Base?

Joshua Aizenman, Yothin Jinjarak

NBER Working Paper No. 11933
Issued in January 2006
NBER Program(s):   ITI   PE

This paper evaluates the impact of globalization on the tax bases of countries at varying stages of development. We see globalization 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.

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This paper was revised on May 30, 2007

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Document Object Identifier (DOI): 10.3386/w11933

Published: Aizenman, Joshua and Y. Jinjarak. “Globalization and Developing Countries: A Shrinking Tax Base?" Journal of Development Studies 45, 5: 653–671. 2009.

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