Taxation policies can explain the differences in countries’ capacity to produce and export more sophisticated products. We develop a theoretical model considering elements from standard models of economic growth to highlight that a country’s productive structure is implied by the appropriate fiscal policy that is necessary for the development of sophisticated products. We show that economies that rely less on capital relative to labor taxation tend to produce more complex products, while countries that rely more heavily on capital relative to labor taxation produce simple products. These relationships remain robust across alternative econometric specifications. Furthermore, we demonstrate the differential effect of a country’s level of economic development on the nexus between the structure of taxation and economic sophistication. We show that the negative impact of capital taxes on economic sophistication becomes stronger for countries that are more developed.
LAPATINAS Athanasios;
KYRIAKOU Alexandra;
GARAS Antonios;
2019-04-04
PUBLIC LIBRARY SCIENCE
JRC115598
1932-6203 (online),
https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0213498,
https://publications.jrc.ec.europa.eu/repository/handle/JRC115598,
10.1371/journal.pone.0213498 (online),
| Name | Country | City | Type |
|---|
This document is only visible at the Commission level.
You are not authorized to publish or distribute it outside the European Commission.
This is a public document. You can share this publication.
Datasets
| ID | Title | Public URL |
|---|
Dataset collections
| ID | Acronym | Title | Public URL |
|---|
Scripts / source codes
| Description | Public URL |
|---|
Additional supporting files
| File name | Description | File type |
|---|