Seminar with Morten Jerven (NTNU) and Marvin Suesse (Trinity College Dublin)
They will present a paper "Taxation, Fiscal Capacity and Economic Development in Africa, 1900 -2015: Lessons from a new dataset." The paper is co-authored with Thilo Albers, Humboldt University of Berlin.
Taxation matters for economic development. Theoretical and empirical questions in the literature remain divisive. Why do developing countries tax so little? Are states incapable of delivering public goods needed for economic development, or have states been too extractive and thus have hampered economic growth? Most of these questions have thus far been answered relying on cross sectional observations and comparative statics. Analytical insight into how states develop has been hampered by the lack of reliable time series data that can establish how much states in Africa taxes today, as compared to 20, 50 or 100 years ago. This paper brings new lessons, derived from a new dataset that tracks real tax revenue per capita across the 20th century for African economies. We argue that rather stagnation, the defining feature has been growth. But growth has been volatile. Our dataset allows disaggregation, across categories and countries. We observe surprisingly high initial levels of direct taxation. We see high divergence in initial country trajectories, with convergence towards high growth in natural resource revenue and indirect taxation in recent times. The dataset raises questions about the persistence of pre-colonial and colonial institutions and suggest substantial reframing of the central questions surrounding taxation and economic development in African economies.