Driving fiscal growth: the impact of EITI membership on tax revenue mobilization in resource-rich developing countries

Harouna Kinda ()
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Harouna Kinda: CERDI - Centre d'Études et de Recherches sur le Développement International - IRD - Institut de Recherche pour le Développement - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne

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Abstract: Resource-rich developing nations continue to grapple with the paradox of abundant natural wealth failing to translate into sustainable growth—a phenomenon often dubbed the ‘resource curse.' As global initiatives strive to harness natural resources for development, this paper evaluates the ‘treatment effect' of Extractive Industries Transparency Initiative (EITI) membership on tax revenue mobilization in resource-rich developing countries. We hypothesize that EITI implementation enhances governance quality in these nations, thereby improving tax revenue mobilization. Analyzing a sample of 83 resource-rich developing countries from 2001–2017 and employing propensity score matching (PSM) and difference-in-differences (DID) with multiple treatment groups and periods, our findings reveal that EITI membership significantly boosts tax revenue mobilization compared to non-EITI countries, with a dynamic causal impact since the commitment year. Additionally, EITI compliance generates a substantial surplus in tax revenues. Our results remain robust when examining disaggregated tax revenues, such as corporate income tax non-resource tax and resource tax revenues. While the EITI is not a panacea, its rigorous implementation, driven by enhanced governance, appears to significantly bolster tax revenue mobilization.

Keywords: EITI; tax revenue mobilization; Governance; Extractive industries; Natural resources (search for similar items in EconPapers)
Date: 2024-12-09
New Economics Papers: this item is included in nep-pbe
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Published in Oxford Development Studies, 2024, 53 (1), pp.66-85. ⟨10.1080/13600818.2024.2439550⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03208955

DOI: 10.1080/13600818.2024.2439550

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