## Determinants of Tax Revenue Efforts in Developing Countries

_IMF Working Papers, July 1, 2007_

## Source details

**Canonical URL:** [Determinants of Tax Revenue Efforts in Developing Countries](https://www.imf.org/en/publications/wp/issues/2016/12/31/determinants-of-tax-revenue-efforts-in-developing-countries-21040)

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## Bibliographic details
- Authors: Abhijit Sen Gupta
- Published: July 1, 2007
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451867480.001

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### Overview
- This paper contributes to the existing empirical literature on the principal determinants of tax revenue performance across developing countries by using a broad dataset and accounting for some econometric issues that were previously ignored.
- The paper makes use of a revenue performance index to assess countries’ performance relative to potential.

### Key empirical findings
- Structural factors that significantly affect revenue performance:
  - per capita GDP
  - agriculture share in GDP
  - trade openness
  - foreign aid
- Other factors influencing revenue performance:
  - corruption
  - political stability
  - share of direct and indirect taxes
- Using the revenue performance index:
  - several Sub Saharan African countries are performing well above their potential
  - some Latin American economies fall short of their revenue potential

### Methodology and measures
- Employs a broad dataset covering developing countries.
- Accounts for econometric issues previously ignored in the literature.
- Develops and uses a revenue performance (effort) index to compare actual revenues with potential revenues.

### Policy implications and recommendations (inferred from findings)
- Strengthening structural and institutional factors can improve revenue performance, including:
  - policies that raise per capita GDP
  - measures to manage the agriculture share in GDP and to harness trade openness
  - consideration of the impact of foreign aid on domestic revenue mobilization
  - anti-corruption and political-stability enhancing measures
  - adjustments to the balance between direct and indirect taxes to improve revenue outcomes

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## Content in this bundle

- **12. Revenue Performance Index**
  - [12. Revenue Performance Index (Markdown version)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2007/_wp07184.pdf.md){rel="alternate" type="text/markdown"}
  - [12. Revenue Performance Index (PDF)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2007/_wp07184.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/determinants-of-tax-revenue-efforts-in-developing-countries-21040_