Impact of Globalization on Fiscal Instability in South Asian Developing Countries
Author: Romina Maryum

This dissertation seeks to determine the impact of globalization on the tax bases of developing countries both theoretically and empirically at different stages of development for the South Asian developing countries over the period of 1990-2015. Globalization is taken as a process that encourage greater trade and financial openness. Theoretically, it is found that following globalization the revenue sources are shifted from “easy to collect” taxes (international trade taxes and seigniorage) to “hard to collect” taxes (income tax and VAT) sources. The panel data set is estimated using the system GMM and then based on the coefficient estimates of the system GMM, one standard deviation change is calculated. Empirical estimates showed that following the one standard deviation increase, the globalization factors decrease the revenue collection from “easy to collect” taxes by 7.95 per cent while increases the revenue collection from “hard to collect” taxes by 4.67 per cent, The overall results confirm that globalization has negative relation with “easy to collect” taxes and positive with “hard to collect” taxes and there is an overall decline in the tax revenues that leads to the problem of fiscal instability in the developing countries. But for this problem we can’t blame the globalization solely because the “hard to tax” taxes needs the better institutions, political stability and other structural factors to perform well, but these developing countries are constraint by these factors, which contributed significantly to the fiscal instability of these countries. Supervisor:- Prof. Dr. Usman Mustafa

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Keywords : Developing Countries, Globalization, Instability
Supervisor: Usman Mustafa

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