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

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. (c) 2012 Elsevier Ltd. All rights reserved.