Taxation, Foreign Aid and Political Governance: Figures to the Facts of a Celebrated Literature

African Governance and Development Institute Working Paper No. 22/14

33 Pages Posted: 23 Nov 2014

See all articles by Simplice Asongu

Simplice Asongu

African Governance and Development Institute

Date Written: August 22, 2014

Abstract

This paper puts figures to the facts of Eubank (2012), a recently celebrated paper in the Journal of Development Studies. We investigate the underpinning Somaliland-based hypothesis that foreign aid dilutes the positive role of taxation on political governance. The assessment is based on 53 African countries for the period 1996-2010. For more policy options, the dataset is disaggregated into fundamental characteristics of African development based on income-levels, legal origins, natural resources and landlockeness. While the Eubank hypothesis is invalid in baseline Africa, low-income and English common law countries of the continent, we cannot conclude on its validity for other fundamental characteristics of development. Policy implications, caveats and future directions are discussed.

Keywords: Foreign Aid; Political Economy; Development; Africa

JEL Classification: B20; F35; F50; O10; O55

Suggested Citation

Asongu, Simplice, Taxation, Foreign Aid and Political Governance: Figures to the Facts of a Celebrated Literature (August 22, 2014). African Governance and Development Institute Working Paper No. 22/14. Available at SSRN: https://ssrn.com/abstract=2529445 or http://dx.doi.org/10.2139/ssrn.2529445

Simplice Asongu (Contact Author)

African Governance and Development Institute ( email )

P.O. Box 8413
Yaoundé, 8413
Cameroon

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