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Disparate geography and the origins of tax capacity

Pablo Beramendi () and Melissa Rogers ()
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Pablo Beramendi: Duke University
Melissa Rogers: Claremont Graduate University

The Review of International Organizations, 2021, vol. 16, issue 1, No 9, 213-237

Abstract: Abstract We establish a conceptual and empirical link between the geographic distribution of economic endowments within a nation and long-run fiscal capacity. Economic geography informs elites’ incentives to facilitate large-scale central taxing bureaucracies. Sectoral economic advantage also provides them with leverage to transform these state-building incentives into policy and stable institutional equilibria. We argue that unequal economic endowments across the geography of a nation exacerbate distributive tensions. Political disagreement over the size and the scope of the state hinder centralized investments in state capacity to collect taxes. Using detailed sub-national data and indicators of geographic distribution, we demonstrate global patterns of sub-national economic geography, and how these patterns are related to sub-national variation in economic productivity. We show that divergence in sub-national economies varies across the world and is related to predictable differences in the size of the fiscal state.

Keywords: Economic geography; Taxation; Spatial inequality; Political economy; State capacity (search for similar items in EconPapers)
JEL-codes: H2 H73 N40 N90 R12 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s11558-018-9319-2

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