Does Tax Revenue Improve Economic Complexity in Africa?

Hermann Ndoya () and Pousseni Bakouan ()
Additional contact information
Hermann Ndoya: World Bank, Washington DC, United States, Postal: World Bank Washington DC USA
Pousseni Bakouan: University Norbert Zongo, Burkina Faso, Postal: Virtual University of Burkina Faso

Journal of Economic Integration, 2023, vol. 38, issue 2, 278-301

Abstract: This study assesses the effect of tax revenue on economic complexity in Africa using a sample of 29 African countries from 1995 to 2018. Applying the system generalized method of moments (GMM), we found that tax revenue spurs economic complexity in Africa by providing countries with critical financial resources to produce complex and sophisticated goods. We performed several robustness tests, including controlling for macroeconomic volatility and employing various measures of economic complexity and tax revenue, and the results remain robust. Furthermore, the mediation analysis results show that the effect of tax revenue on economic complexity is mediated by financial development and government spending. This study advocates for government strategies to enact tax reforms and maximize tax revenue mobilization, which will help finance economic complexity.

Keywords: tax revenue; economic complexity; GMM; Africa (search for similar items in EconPapers)
JEL-codes: C33 E62 O11 O55 (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.e-jei.org Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:integr:0875

Access Statistics for this article

Journal of Economic Integration is currently edited by Seongeun Kim

More articles in Journal of Economic Integration from Center for Economic Integration, Sejong University Contact information at EDIRC.
Bibliographic data for series maintained by Yunhoe Kim ().