13th World Summit on Management Sciences (Part II)
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Accepted Abstracts

Econometric Analysis of the Effects of Corruption on Government Tax Revenue: Evidence from Panel Data in Developed and Developing Countries

Seyfe Fikre* 
Bonga University, Ethiopia

Citation: Fikre S (2021) Econometric Analysis of the Effects of Corruption on Government Tax Revenue: Evidence from Panel Data in Developed and Developing Countries. SciTech Management Sciences 2021. 

Received: November 02, 2020         Accepted: November 06, 2020         Published: November 06, 2020

Abstract

Corruption and tax evasion remain main problems in both developed and developing countries. Corruption is misuse of public resource for private purpose. Corruption erodes the government tax revenue growth over GDP in both developing and developed countries by creating a negative effect on the investors and the retardation in economic growth. So, the contribution of this study was to extend the conventional determinants of tax revenue over gross domestic product not only supply factor but also demand factor such as corruption, political stability, and rule of low which determine the tax revenue over gross domestic product to a significant extent. Panel regression model was used for analysis and Panel data were collected from 33 developing and developed countries for the period of 2002-2017. The data sets which were used in model analysis were obtained from the database of the world development indicators. As the fixed effect regression result indicates corruption has significant adverse effect on government tax revenue over gross domestic product in both developed and developing countries. The least corrupted countries collect 6% more tax revenue than high corrupted countries. The great progress in corruption has to be monitored and reduced. So, corruption no longer considered as an exogenous factor in an economy, it should be considered as a controlled and minimized phenomenon by the democratic institution and civil society. Therefore legislative reforms have to be continued in order to diminish corruption.
Keywords: Developed and Developing Countries; Corruption; Tax Revenue over GDP; Panel Data