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The Illusory Leader: Natural Resources, Taxation and Accountability

By Eoin F. Mcguirk

Abstract

This paper proposes and tests a mechanism through which the natural resource curse operates. I posit that, in the presence of high natural resource rents, leaders lower the burden of taxation on citizens in order to reduce the demand for democratic accountability. The theory is tested using micro-level data from public opinion surveys across 15 sub-Saharan countries, in addition to country-level data on natural resource rents, taxation and election proximity. It is found that an increase in natural resource rents decreases tax enforcement, which in turn reduces the demand for regular, open and honest elections. Results are robust to alternative speci…cations. A supplementary analysis reveals that, consistent with the twoperiod model proposed, the e¤ects are more acute closer to national elections. The …ndings support political-economy explanations of the natural resource curse, in which resource rents are purported to a¤ect the decisions of the political elite through increased returns to staying in power

Year: 2010
OAI identifier: oai:CiteSeerX.psu:10.1.1.192.6055
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