Taking off from Natural Resources? Fiscal dependence in Andean and Nordic countries, 1850s-1930s

Summary, in English

Natural resources can have a powerful impact on the public budget but may also hinder the development of other sources of revenue, thus limiting the long-term development of fiscal capacity in resource-rich countries. This article evaluates both possible effects bycomparing the long-term evolution (1850s-1930s) of public revenues in Andean (Bolivia,Chile and Peru) and Nordic (Norway and Sweden) countries. Both groups were naturalresource abundant during the period under scrutiny. In the latter, however, natural resources dependence decreased over time. We use this divergent pattern to explore if, and how, natural resources abundance generates a fiscal dependence on natural resources revenues. By using a novel detailed database, we find that fiscal dependence on natural resources revenues was low in Nordic countries and highly unstable in Andean countries.
This suggests that natural resources abundance should not be mechanically linked to tax dependence. Indeed, by using an accounting identity, we show that tax dependence on natural resources can be evaluated by looking at economic or political changes (or both) that affect either the natural resource sector or the non-natural resource sector.

• Author: Cristian Ducoing; Sara Torregrosa-Hetland; José Peres-Cajías
• Department/s: Department of Economic History
• Publishing year: 2019-12
• Language: English
• Document type: Conference - other
• Topic: Economic History
• Keywords: Natural Resources curse; Taxation; Latin America; Scandinavia; Fiscal contract
• Conference name: RIDGE DECEMBER FORUM
• Conference date: 2019-12-02 - 2019-12-03
• Conference place: Montevideo, Uruguay
• Status: Published
• Project: Taxing for the welfare state: public finances and progressivity in the rise of social spending (1910-1970); Sustainable development, Fiscal policy and Natural resources management. Bolivia, Chile and Peru in the Nordic countries’ mirror