Domestic revenue displacement in resource-rich countries: What’s oil money got to do with it?

Daniel Ofoe Chachu

Resources Policy, 2020, vol. 66, issue C

Abstract: Cross-country studies on the effect of hydrocarbon revenues and non-hydrocarbon tax effort are only now emerging. Using an expanded global dataset in a two-stage least squares framework, we confirm a displacement effect. A percentage point increase in hydrocarbon revenues displaces non-hydrocarbon revenues by 0.2 to 0.3 percentage points. With low levels of domestic revenue and a debt crises looming for many developing countries, resource-rich countries need to leverage on their resource wealth to invigorate the non-resource sectors of their economies. This should widen the tax base and optimize the tax take for oil-rich countries over the long haul.

Keywords: Hydrocarbon revenues; Non-hydrocarbon revenues; Institutions (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:66:y:2020:i:c:s0301420719309079

DOI: 10.1016/j.resourpol.2020.101656

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