Taxation and economic sophistication: Evidence from OECD countries.

ABSTRACT: 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 structur

SUBMITTER: Lapatinas A 

PROVIDER: S-EPMC6426228 | biostudies-literature | 2019

REPOSITORIES: biostudies-literature