Economic Transformation and Tax Revenue Performance in SSA Countries
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Date
2026
Authors
Fossong Derrick
Ndamsa Dickson Thomas
Journal Title
Journal ISSN
Volume Title
Publisher
AERC
Abstract
Many studies have addressed the determinants of tax revenue performance,
but knowledge on the causal impacts of economic transformation is nearly
non-existent. This study used panel data from the World Bank Development
Indicators and UNDP database over the period 1990–2021 to provide evidence
on the effect of economic transformation on tax revenue performance. Our
panel data estimation disentangled the causal effects of economic
transformation in resource-rich and non-resource-rich countries. We
employed the GMM to correct the problem of dynamic endogeneity and
unobserved panel heterogeneity. We further utilized the fixed and random
effects to assess the robustness of the GMM estimations. GMM results
indicated that economic transformation has a significant positive effect on tax
revenue performance in SSA. The fixed and random effects results reported a
positive and significant effect of economic transformation on tax revenue
performance in SSA, similar to the GMM results. We used two ICT-related
transmission mechanisms: ICT adoption and ICT export/import. We found that
ICT stock does mediate the effect of economic transformation on tax revenue
performance. Like in resource-rich countries, economic transformation had a
positive impact on tax revenue performance in non-resource-rich countries.
Thus, this study recommends that SSA countries, in an effort to increase tax
revenue performance, should promote economic transformation through the
DEPTH (diversification, export competitiveness, productivity, technological
upgrading, and human well-being). Measures to enhance ICT adoption the for
e-tax system are vital in strengthening the relationship between economic
transformation and tax revenue performance in SSA.