Trade openness,tax reform and tax revenue in developing countries

This article investigates empirically whether the effect of tax reform (involving the progressive replacement of trade tax revenue with domestic tax revenue) in developing countries' tax revenue performance (measured by tax revenue‐to‐GDP ratio) depends on the degree of trade openness of these countries. The analysis has used an unbalanced panel data set of 95 developing countries over the period 1981–2015 and the two‐system GMM approach. Results suggest that tax reform is positively and significantly associated with tax revenue performance in developing countries, with the magnitude of this positive effect increasing as countries experience a higher development level. Additionally, and more importantly, countries that further open up their economies to international trade enjoy a higher positive effect of tax reform on tax revenue than countries that experience a lower degree of trade openness. Therefore, these findings should help dissipate the concerns of policymakers in developing countries that greater openness to international trade would further erode their tax revenue, including by lowering their international trade tax revenue. In fact, the implementation of an appropriate tax reform in the context of greater trade openness would generate higher tax revenue, while concurrently allowing countries to reap the well‐known benefits of international trade.     

Land reform in India

The favourable harvest yields of past years in developing countries have in Europe evoked the rumour of a “green revolution”. But the problems with which developing countries are confronted have by no means been solved by the, mainly technological, changes. In view of this development it is now more than ever before the right time to tackle the many agricultural problems.     

Tourism promotion in developing countries

When announcing its ideas on development policy in the Second Development Decade which began in 1971, the Federal Government said that it “wishes to promote tourism in sultable less developed countries (LDCs) through improvement of the infrastructure, especially transport, provision of accommodation and training of the required personnel, making use of development banks in suitable cases”.     

German investment in developing countries

The Pros and Cons of direct investment promotion measures in overseas countries have recently become the subject of fierce controversy in all industrialised countries, including the Federal Republic of Germany. Advocates and opponents of such measures, however, almost exclusively try to analyse the desirability and effects of such investments in the industrialised countries only, virtually disregarding the problem of direct investment in developing countries. The Department on Development Policies of the Hamburg Institute for International Economics has therefore recently begun to investigate the volume, the motivation, and the success of German investments in the “Third World”. The following report discusses the first results of this study.     

Agricultural policy in developing countries

Development failures are less the result of “natural” short-comings, but are caused instead by false conceptions and by the misapplication of experience from highly-developed economic systems to countries in the initial development stage. The following article points out the pit-falls and discusses some alternative strategies.     

Employment policies in developing countries

The ILO World Conference on Employment was held in Geneva from June 4 to 17, 1976 and after long discussions adopted an action programme which provided for quite a number of measures designed to ensure full employment in developing countries until the year 2000. The problems posed by a policy of full employment in developing countries are indicated in the following article which demonstrates that a change in the inherited power structures is a major prerequisite for an effective policy of full employment.     

State enterprises in developing countries

The role of state-owned enterprises in the development process in the Third World is the subject of serious controversy. This article attempts to test empirically whether there is a relationship between the importance of public production in developing countries and their overall economic performance.     

Tax reforms in developing countries

Given the low level of tax revenue and the contradictory structure of tax legislation in many developing countries, there is broad agreement on the need for tax reforms in those countries. The following article reviews the problems associated with instituting such changes.     

Economic recovery in developing countries

Plans and proposals for stimulating the world economy and thus aiding economic recovery in the developing countries have been many and varied, ranging from massive transfer of resources, whether automatic or discretionary, through the immediate programme of the Brandt Commission to a concentration first of all on recovery in the industrial countries. This article takes a critical look at the most important proposals to date.     

Financial policy in developing countries

The present financial policies of the developing countries are hardly likely to create favourable conditions for economic growth. A change can only be brought about if the financing of development projects and the imports of consumer goods can be successfully integrated in an overall plan for economic growth and the generation of new sources of revenue for the state.     

Savings mobilisation in developing countries

Stagnating development aid and continued reluctance on the part of western commercial banks to grant new loans to problem debtor countries have led many developing countries to pay greater attention to the mobilisation of their own resources. This article outlines a strategy for increasing the extent to which domestic savings are made available for development financing.     

Growth policies in developing countries

Long-term growth in most developing countries is driven by the adaptation of technology from developed countries. The question, however, of how to promote technology adaptation is a difficult one. The following article introduces a transaction cost perspective and applies it to the concrete and—against the background of the 4th Ministerial Conference of the WTO in November 2001—topical question: how do WTO rules impact on development in terms of technology adaptation? This issue is of utmost importance to the EU, which put forward the argument that the new Trade Round had to become a “Development Round”.     

Social changes in developing countries

Despite the unmistakable resignation that clearly marked the numerous résumés published at the end of the first development decade, there are signs that scientists are gradually veering round to a more positive attitude towards possibilities of a social change in the developing countries. This is due partly to the fact that more agrarlan reports are becoming available, but partly also to the unmistakable economic success of the so-called “green revolution”.     

Adjustment constraints in developing countries

The debt crisis of the eighties has compelled many developing countries to catch up on a painful adjustment backlog. In addition to traditional stabilization measures sponsored by the IMF, many countries are now acquainted with the structural adjustment programmes of the World Bank. Some have implemented these programmes successfully, others have terminated them after a short period or only partially completed them. What are the reasons for this?     

Financial opening in developing countries

Many developing countries are currently considering liberalisation of external capital flows. While the ultimate objective of financial opening is to raise efficiency and growth, the reform process must be carefully designed to achieve these results. A recent conference has discussed the policy choices.     

Exchange-rate strategies in developing countries

Exchange-rate strategies may be used to pursue the most varied objectives as instruments of development policy or of structural adjustment. The following article will examine the advantages and disadvantages of a number of exchange-rate policy options.