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on Central and Western Asia |
| By: | Richard M. Bird (Director of the International Tax Program, Joseph L. Rotman School of Management, University of Toronto); Jorge Martinez-Vazquez (Andrew Young School of Policy Studies, Georgia State University); Benno Torgler |
| Abstract: | “Will underdeveloped countries learn to tax?” asked Nicholas Kaldor (1963), forty years ago. Underlying this question is the assumption that if a country wishes to become ‘developed’ it needs to collect in taxes an amount greater than the 10-15 percent found in many developing countries. Kaldor’s answer to his question was essentially that since even the poorest country had sufficient ‘capacity’ in both economic and administrative terms to tax more, whether or not a particular country did so depended primarily on its political institutions. Would developing countries be fortunate enough to have those with political power voluntarily give up at least some of their power to block fiscal reform in exchange for social stability? Or would the ruling groups rather wait (in the spirit of après moi le deluge) for the revolutionary upheaval that he considered the only alternative? |
| Keywords: | Societal Institutions,Tax Effort,Developing Countries |
| Date: | 2004–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:ays:ispwps:paper0406&r=cwa |
| By: | Richard M. Bird; Eric M. Zolt |
| Abstract: | In developed countries, the income tax, especially the personal income tax, has long been viewed as the primary instrument for redistributing income and wealth. This article examines whether it makes sense for developing countries to rely on the income tax for redistributive purposes. We put forth three propositions. First, the personal income tax has done little to reduce inequality in many developing countries. This failure is not surprising given that in many countries personal income taxes are neither comprehensive nor very progressive—they often amount to little more than withholding taxes on labor income in the formal sector. Moreover, the personal income tax plays such a small role in the tax systems of developing countries that it would be unrealistic to believe that this tax could have a meaningful impact on distribution. Second, it is not costless to pretend to have a progressive personal income tax system. Tax systems generate real administrative, compliance, economic efficiency and political costs. The costs associated with badly designed and badly administered personal income tax systems likely exceed the costs associated with other taxes. There are opportunity costs as well. Third, given the ineffectiveness of the personal income tax, if countries want to use the fiscal system to reduce poverty or reduce inequality, alternative approaches merit consideration. Countries need to make better use of their expenditure programs in targeting resources to the poor. Given the dominance of taxes on consumption in the tax structure of developing countries, the distributional consequences of consumption taxes are of far greater importance than those of the personal income tax. Countries can also make greater use of benefit taxation and in particular fiscal decentralization may allow for better matching of those who benefit and those who pay for government activity. Finally, countries can consider alternatives to taxing income other than the current comprehensive income approach. |
| Keywords: | Redistribution, Taxation, Personal Income, and Developing Countries |
| Date: | 2005–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:ays:ispwps:paper0507&r=cwa |
| By: | Kose, Ayhan; Prasad, Eswar; Rogoff, Kenneth; Wei, Shang-Jin |
| Abstract: | This Paper provides a comprehensive assessment of empirical evidence about the impact of financial globalization on growth and volatility in developing countries. The results suggest that it is difficult to establish a robust causal relationship between financial integration and economic growth. Furthermore, there is little evidence that developing countries have been consistently successful in using financial integration to stabilize fluctuations in consumption growth. However, we do find that financial globalization can be beneficial under the right circumstances. Empirically, good institutions and quality of governance are crucial in helping developing countries derive the benefits of globalization. Similarly, macroeconomic stability appears to be an important prerequisite for ensuring that financial globalization is beneficial for developing countries. Finally, countries that employ relatively flexible exchange rate regimes and succeed in maintaining fiscal discipline are more likely to enjoy the potential growth and stabilization benefits of financial globalization. |
| Keywords: | globalization; growth; international financial linkages; macroeconomic volatility |
| JEL: | F15 F36 F41 F43 |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:4772&r=cwa |
| By: | Kompal Sinha |
| Abstract: | The present paper investigates the nutrition demand pattern for rural households in India. The non-parametric approach of quantile regression is applied to characterize the entire distribution of calorie consumption. This technique has an advantage over the traditional ordinary least square technique. It relaxes the assumption of a constant effect of the explanatory variables over the entire distribution of the dependent variable. These effects are allowed to vary over the entire distribution of dependent variable i.e., in this case the distribution of calorie consumption. The results show that indeed, the responsiveness of calorie consumption to various factors differs across different levels of calorie consumption. A comparison of the quantile regression results with OLS results suggests conclusions and policy suggestions based on OLS results are unlikely to be ideal. Some further light is also shed on the debate on calorie income elasticity as the magnitude is observed to be different for the undernourished and the over nourished households. |
| Keywords: | Length (pages): 55 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:pas:asarcc:2005-02&r=cwa |
| By: | Prasen Daimari (Department of Economics, North Eastern Hill University, Shillong India); SK Mishra (Department of Economics, North Eastern Hill University, Shillong India) |
| Abstract: | In this study we make an attempt to visualize the structure of the economy of Udalguri Subdivision of Assam, India. The structure of an economy comprises the characteristic features of and the interrelationships among its constituent parts and subsystems. These characteristic features and interrelationships typify the economy and give to it a style, an appearance and individuality of its own. In our study area, we find only a weak interrelationship among various sectors of the economy. The urban sector has little impact on the productive system, mainly due to poor infrastructure. Conspicuous and ceremonial expenditure is substantial, specially in the villages inhabited by indigenous people vis-à-vis the villages inhabited by immigrant people from Bangladesh. The economy is subsistence driven and productive resources are underutilized. Marginal productivity of labour is near- zero and productivity of land provides only subsistence. Poverty keeps consumption and savings low. Capital formation in the rural sector is negligible. Especially, the indigenous farmers are less enterprising vis-à-vis the immigrant farmers. Overall, the economy is in the trap of low-level equilibrium. |
| Keywords: | India, Assam, Udalguri, structure, rural economy, poverty, inequality, cultural variables, determinants, sectoral distribution, income |
| JEL: | D31 D61 I32 Q12 Q15 |
| Date: | 2005–04–29 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpur:0504011&r=cwa |
| By: | Patricia Justino (Poverty Research Unit at Sussex) |
| Abstract: | This paper analyses the relationship between redistributive policies and civil unrest. This relationship is modelled in a discrete two-period recursive model. Key theoretical assumptions and outcomes are tested empirically using data for a panel of 14 major Indian states between 1973 and 2000. The analysis shows that, in the medium-term, redistributive policies have been significantly more effective in reducing civil unrest in India than more direct solutions, such as the use of police and military forces, and have resulted in important positive externalities on economic growth. This represents an important lesson for countries where social cohesion tends to break frequently but large-scale wars may be avoidable. |
| Keywords: | redistribution, conflict, inequality, economic growth, India, panel data |
| JEL: | C33 O1 O53 |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:hic:wpaper:05&r=cwa |