In a nutshell
- It is often discussed that negative oil revenues may increase pressure for democratization via fiscal channels.
- A declining oil rents may increase the willingness of the state to collect more taxes, leading to more political economic participation of the people.
- We revise this argument in the resource curse literature by taking the shadow economy into account.
- Using a panel data covering 124 countries for the period 1991-2015, we show that a declining oil income may not increase tax efforts of the state under a sizable shadow economy.
- Democratization in oil-based economics as a result of dropping oil income through the channel of taxes may not realize under a high share of informal economy.
![Oil Rents, Tax Revenues and the Shadow Economy: New Insights](https://erf.org.eg/app/uploads/2020/11/1605029093_191_71720_nl_phoebeishak-150x150.png)
Research Fellows
Phoebe W. Ishak
Postdoc Aix-Marseille School of Economics
![Oil Rents, Tax Revenues and the Shadow Economy: New Insights](https://erf.org.eg/app/uploads/2015/12/1598442500_276_88898_nl_farzanegan.jpg-150x150.png)
Research Fellows
Mohammad Reza Farzanegan
Professor in Economics of the Middle East,...