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Globalization and Developing Countries - A Shrinking Tax Base?

29 Pages Posted: 14 Oct 2008  

Joshua Aizenman

National Bureau of Economic Research (NBER)

Yothin Jinjarak

University of London - SOAS - Department of Financial and Management Studies

Multiple version iconThere are 2 versions of this paper

Date Written: May 1, 2007

Abstract

This paper evaluates the impact of globalization on 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.

Keywords: Globalization, tax base, fiscal convergence, VAT, financial repression, tariff

JEL Classification: F15, H21

Suggested Citation

Aizenman, Joshua and Jinjarak, Yothin, Globalization and Developing Countries - A Shrinking Tax Base? (May 1, 2007). Available at SSRN: https://ssrn.com/abstract=1283956 or http://dx.doi.org/10.2139/ssrn.1283956

Joshua Aizenman (Contact Author)

National Bureau of Economic Research (NBER) ( email )

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Yothin Jinjarak

University of London - SOAS - Department of Financial and Management Studies ( email )

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London, WC1H 0XG
United Kingdom

HOME PAGE: http://https://sites.google.com/site/yothinjinjarak/

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