Title: Taxation and Public Spending in Autocracies
Abstract: The vast majority of societies in the history of the world have been ruled by authoritarians. Only since 1991 has democracy been the most prevalent political system in the world – and even in 2007, 46 percent of the world population was living in non-democratic regimes. While there has been much research on politics in advanced industrial countries and democracies, we are only beginning to understand how autocracies work. More often than not, political scientists assume that autocracies and democracies are fundamentally different and pursue contrasting policies. Dominant models suggest that democracies will tax, redistribute and provide public goods at higher levels than autocracies. Yet, in contrast to these simplistic predictions, often autocracies out-spend and out-tax democracies. Current political economic models do not offer sufficient explanatory power in autocracies. This paper is concerned with the question of when autocracies have incentives to invest in fiscal capacity. Specifically, when do investments in public services generate a high enough pay off to the autocratic elite to warrant an efficient system of taxation? I argue that when a high level of public service provision is profitable and a private provision of these goods by elite members is unlikely, efficient taxation and government spending becomes rational for autocratic elites. The propensity for authoritarian elites to engage in government spending towards public services depends on the economic characteristics they are engaged in. I contend that depending on the economic characteristics of the country, elites can directly benefit from government spending. If they do so, and conditional on the level of inequality, efficient taxation to finance public goods becomes more likely. In this paper, I test this theoretical argument on a cross-section sample of authoritarian regimes. I utilize data on taxation in autocracies around the world and apply imputation techniques to alleviate bias due to missing data. I further explore the argument using four suggestive cases.
Publication Year: 2013
Publication Date: 2013-01-01
Language: en
Type: article
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