Fiscal Capacity and the Quality of Government in Sub-Saharan Africa

Abstract

Summary Historical evidence from the industrialized world suggests that the expansion of the modern state’s capacity to tax eventually led to more democratic and less corrupt governments. Using a dataset that covers 31 sub-Saharan African countries over the 1990–2005 period, we study whether the positive effect of fiscal capacity on the quality of government prevails in contemporaneous sub-Saharan Africa as well. The results provide consistent evidence that within sub-Saharan Africa, fiscal capacity decreases corruption and increases democracy.