Globalization and Developing Countries - a Shrinking Tax Base?

30 Pages Posted: 13 Apr 2006  

Joshua Aizenman

National Bureau of Economic Research (NBER)

Yothin Jinjarek

Nanyang Technological University (NTU)

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Date Written: January 2006

Abstract

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.

Suggested Citation

Aizenman, Joshua and Jinjarek, Yothin, Globalization and Developing Countries - a Shrinking Tax Base? (January 2006). NBER Working Paper No. w11933. Available at SSRN: https://ssrn.com/abstract=876036

Joshua Aizenman (Contact Author)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Yothin Jinjarek

Nanyang Technological University (NTU) ( email )

S3 B2-A28 Nanyang Avenue
Singapore, 639798
Singapore

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