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Tax revenues, development, and the fiscal cost of trade liberalization, 1792-2006
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Cage, Julia and Gadenne, Lucie (2016) Tax revenues, development, and the fiscal cost of trade liberalization, 1792-2006. Working Paper. Coventry: Department of Economics, University of Warwick. Warwick Economics Research Paper Series (WERPS) (1132). (Unpublished)
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Abstract
This paper documents the fiscal cost of trade liberalization: the extent to which countries are able to recover the trade tax revenues lost from liberalizing trade by increasing tax revenues from other sources. Using a novel dataset on government revenues over the period 1792-2006 we compare the fiscal impact of trade liberalization in developing countries and in today’s rich countries at earlier stages of development. We find that trade liberalization episodes led to larger and longer-lived decreases in total tax revenues in developing countries since the 1970s
than in rich countries in the 19th and early 20th centuries. Half the developing countries in our sample experience a fall in total tax revenues that lasts more than ten years after an episode. Results are similar when we consider government expenditures, suggesting decreases in trade tax revenues negatively affect governments’ capacity to provide public services in many developing countries.
Item Type: | Working or Discussion Paper (Working Paper) | ||||
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Subjects: | H Social Sciences > HC Economic History and Conditions H Social Sciences > HF Commerce |
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Divisions: | Faculty of Social Sciences > Economics | ||||
Library of Congress Subject Headings (LCSH): | Free trade, Developed countries -- Economic conditions—18th century, Developed countries -- Economic conditions -- 19th century, Developing countries -- Economic conditions—20th century, Developing countries -- Economic conditions—21st century | ||||
Series Name: | Warwick Economics Research Paper Series (WERPS) | ||||
Publisher: | Department of Economics, University of Warwick | ||||
Place of Publication: | Coventry | ||||
ISSN: | 0083-7350 | ||||
Official Date: | October 2016 | ||||
Dates: |
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Number: | 1132 | ||||
Number of Pages: | 36 | ||||
Status: | Not Peer Reviewed | ||||
Publication Status: | Unpublished | ||||
Access rights to Published version: | Open Access (Creative Commons) | ||||
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