Contracts, Norms, and Political Economy: Sub-Saharan State Credibility and the Microeconomic Foundations of Developmental Taxation

Abstract

The article focuses on the microeconomic foundations and effects of the fragile tax base in Sub-Saharan Africa, which have been insufficiently taken into account by the international financial institutions. Two vicious circles are analysed. The first addresses the political economy of states: their inability to redistribute revenues reinforces a lack of credibility, leading to a reluctance by the majority of the population to pay taxes. Instead, there is ongoing reliance on private interpersonal transfers. This is compounded by the way markets interlock, creating negative effects in terms of efficiency. This vicious circle is related to a second one, which stems from the nature of the social contracts that link citizens to the state, and which are rarely of the individualistic-voluntary type characteristic of developed states. States, therefore, are often not part of the reciprocity chain, which explains the failure of some reforms in Africa.