Taxation, Accountability, and Cash Transfers : Breaking the Resource Curse
Why is governance in resource-rich countries so poor This paper argues that it is because governments in these countries do not rely on taxation, which is an important instrument for citizens to hold their governments accountable. Using a game-theo...
| Main Authors: | , |
|---|---|
| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2021
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/undefined/152821639419544854/Taxation-Accountability-and-Cash-Transfers-Breaking-the-Resource-Curse http://hdl.handle.net/10986/36738 |
| Summary: | Why is governance in resource-rich
countries so poor This paper argues that it is because
governments in these countries do not rely on taxation,
which is an important instrument for citizens to hold their
governments accountable. Using a game-theoretic model, the
authors show that the combination of low taxes and weak
governance can be an equilibrium in an economy with sizeable
mineral revenues. As income from natural resources
ultimately declines, replacing it with tax revenues may
require governments to give control of these proceeds to
citizens, in the form of cash transfers say, as a credible
commitment to accountability, thereby breaking the country
out of its resource curse. |
|---|