IMF Working Papers

This paper examines whether the drivers of domestic revenue mobilization in emerging and developing economies (EMDEs) vary across levels of revenue performance, with a particular focus on non resource tax. Using panel quantile regressions for 118 countries over 1990-2022, we find substantial heterogeneity in the correlates of revenue mobilization. At relatively low tax performance, after accounting for country-fixed effects, per capita income growth, IMF technical assistance, and governance quality are most strongly associated with revenue gains. By contrast, at relatively higher tax-to-GDP level, governance quality appears to be the most robust correlate. Focusing on the role of technical assistance, we construct a novel shift-share instrument by interacting annual aggregate IMF capacity-development resources with a predetermined measure of country exposure. Our IV-based analysis supports the idea that technical assistance matters most when tax performance is relatively low. These results highlight the need to tailor reform strategies, with focused technical assistance where revenue performance is relatively low, while strengthening the role of governance and the social contract in sustaining high levels of domestic revenue mobilization.