Tax Transition Reform and Economic Growth in Developing Countries

The current article examines the economic growth effect of tax transition reform in developing countries. Tax transition reform is defined here as the process that entails the convergence of developing countries' tax structure toward that of developed countries. The analysis covers a sample of 101 developing countries over the period of 1980 to 2019. The empirical analysis that makes use of the two-step system generalized method of moments has shown that tax transition reform promotes economic growth, including in countries with a high share of non-resource tax revenue in total public revenue. These findings have important policy implications.