Intra-elite competition and long-run fiscal development

This paper exploits an original database that spans 30-plus developed and developing nations between 1870 and 2010 to perform the first empirical analysis of the relationship between historical levels of intra-elite competition and fiscal development over the long run. We argue that the timing of industrialization affects the extent of historical competition between agricultural and capitalist elites, which in turn helps shape key initial decisions over fiscal size and structure. Under “early” industrialization, intra-elite competition levels tended to be greater, promoting fiscal development characterized by high overall taxation and tax progressivity. Under “late” industrialization, by contrast, agricultural elites were more likely to retain political dominance, promoting fiscal states characterized by low overall taxation and tax regressivity. We show evidence for a positive, statistically significant, and robust relationship between historical intra-elite competition levels and long-run fiscal development. This focus on intra-elite competition improves our understanding of the fundamental determinants of cross-national fiscal differences today.

Duke Scholars

Author Pablo Beramendi Political Science