Monopoly of Taxation Without a Monopoly of Violence: The Weak State’s Trade-Offs From Taxation

Soeren Henn, Christian Mastaki Mugaruka, Miguel Ortiz, Raúl Sánchez de la Sierra and David Qihang Wu

No 28631, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This study presents a new economic perspective on state-building based on a case study in the Democratic Republic of the Congo’s hinterland. We explore the implications for the state of considering rebels as stationary bandits. When the state, through a military operation, made it impossible for rebels to levy taxes, it inadvertently encouraged them to plunder the assets of the very citizens they previously preferred to tax. When it negotiated with rebels instead, this effect was absent, but negotiating compromised the state’s legitimacy and prompted the emergence of new rebels. The findings suggest that attempting to increase taxation by a weak state in the hinterland could come at the expense of safety in the medium term and of the integrity of the state in the long term.

JEL-codes: H2 O55 P26 P48 (search for similar items in EconPapers)
Date: 2021-04
New Economics Papers: this item is included in nep-afr
Note: DEV POL
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