Growth, Debt, and Politics: Economic Adjustment and the Political Performance of Developing Countries

By Lewis W. Snider | Go to book overview

Notes
1.
Political extraction must be treated as relative because there is no absolute fixed reference point common to all countries. An absolute measure of a country's political extraction would be tax revenues (minus social security taxes) as a percentage of GDP. This would permit comparisons of a single country's performance over time, but it would not be valid for cross-national comparisons. Cross-national comparisons require a proportional index based on a common reference point, preferably unity. That reference point is based on the predicted values of average extraction capacity generated by multiple regression. The composition of the sample of countries and years included in the regressions determine these average expected values. Hence a country's score is determined in part by the values of other countries with similar population characteristics, level of development, natural resource endowment and reliance on the foreign trade sector.
2.
Chelliah notes that using imports plus exports as a percentage of GNP ends up taking into account not the base for foreign trade taxes as such, but the total tax base. The purpose of this measure is to isolate the foreign trade sector. The export ratio is more appropriate than using the sum of imports plus exports as a percentage of GNP when the foreign trade variable is intended to reflect the size of the base that is amenable to corporate income or export taxation. If it is more feasible, administratively and politically, to tax large exporters than it is to tax other domestic producers, the tax ratio is higher ( Bahl 1971: 587). Thus more accurate results should be obtained by taking the export ratio. Additionally, previous work (by way of correlation analysis) by Lotz and Morss ( 1967) showed that the export ratio was more closely associated with the tax ratio than either the import or the foreign trade ratio ( Chelliah 1971: 294).
3.
Social security taxes are subtracted from total tax revenue because they are usually nondiscretionary; they can only be used for specific purposes defined by law. Hence, the government has no real latitude in determining how such revenues are spent. In addition, not all developing countries collect social security taxes. If social security taxes are not deducted from total tax revenues, the countries that collect them would appear to be extracting much larger shares of resources from their societies in comparison to other developing countries (with similar economic structures and resource endowments) than they really are.
4.
On the association of increased frequencies of collective violence in new states as the state seeks to establish its effective authority nationally, see Cohen, Brown and Organski ( 1981: 901-10); Migdal ( 1988: 23-4); and Tilly ( 1975: 632-33).
5.
The countries used in this study are classified by level of economic development into one of four groups based on per capita GNP in 1990 dollars. Least Developed Economies: countries with a per capita GNP of less than $630.00 in 1990. Developing Economies: countries with a per capita GNP of at least $630.00 and less than $3,900.00 per year, or whose exports of manufactures accounted for over 15 percent but less than 50 percent of total exports in 1984- 1986. Advanced Developing Economies: non-OECD countries with a per capita GNP of at least $3,900 and less than $11,500. By these criteria India and China should both be classified as "less developed." However, China's mean economic complexity score is 23.4 which places it in the "advanced developing" category.

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