Scandinavian Working Papers in Economics

Working Papers in Economics,
University of Gothenburg, Department of Economics

No 506: Fiscal capacity and government accountability in sub-Saharan Africa

Thushyanthan Baskaran () and Arne Bigsten ()
Additional contact information
Thushyanthan Baskaran: Department of Economics, School of Business, Economics and Law, Göteborg University, Postal: Box 640, SE 40530 GÖTEBORG
Arne Bigsten: Department of Economics, School of Business, Economics and Law, Göteborg University, Postal: Box 640, SE 405 30 GÖTEBORG

Abstract: Historical evidence from the developed world suggests that the expansion of the mod- ern states’ fiscal capacity (i. e. its ability to tax citizens) eventually led to more democratic and less corrupt governments. Since sub-Saharan African countries are currently in a pro- cess of state building, we study whether a positive effect of fiscal capacity on government accountability prevails in contemporaneous sub-Saharan Africa, too. We conduct the em- pirical analysis with data covering 23 African countries over the 1960-2008 period. The results suggest that fiscal capacity increases government accountability in sub-Saharan Africa.

Keywords: Fiscal capacity; taxation; government accountability; democracy

JEL-codes: H20; O23; P14

34 pages, June 15, 2011

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