<p>This study aims to analyze the impact of terrorism on the ability of 44 African countries to collect tax revenues between 2000 and 2020. Using the generalized system of moments method, we find that terrorism reduces the ability of African governments to collect taxes. This result remains unchanged after decomposing tax revenues into direct and indirect taxes, as well as after using alternative and disaggregated indicators of terrorism. Additional analyses based on a simple mediation approach and an instrumental variable mediation approach show that the indirect effect of terrorism is greater than its direct effect. This suggests that the impact of terrorism on taxation is exerted primarily through economic and structural mechanisms, notably the contraction of consumption, the disruption of trade, the decline in FDI, and the expansion of the informal sector. However, a comparative examination of the mediation results reveals that trade and consumption are the most robust transmission channels, their role being confirmed by both mediation approaches. In contrast, the influence of the informal economy and FDI is clearly established only within the framework of the instrumental variable mediation approach. In terms of economic policy implications, these results suggest that African authorities should find mechanisms to strengthen the resilience of domestic demand by supporting household purchasing power, stabilizing local markets, and securing trade flows, in order to reduce fiscal vulnerability to terrorist shocks. It is also essential to enhance the attractiveness of the business climate for foreign investors and to implement strategies to curb the expansion of the informal economy.</p>

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Fiscal consequences of terrorism in Africa: a direct and indirect approach

  • Charles Christian Atangana Zambo,
  • Bruno Emmanuel Ongo Nkoa,
  • Yves Patrice Etogo Nyaga

摘要

This study aims to analyze the impact of terrorism on the ability of 44 African countries to collect tax revenues between 2000 and 2020. Using the generalized system of moments method, we find that terrorism reduces the ability of African governments to collect taxes. This result remains unchanged after decomposing tax revenues into direct and indirect taxes, as well as after using alternative and disaggregated indicators of terrorism. Additional analyses based on a simple mediation approach and an instrumental variable mediation approach show that the indirect effect of terrorism is greater than its direct effect. This suggests that the impact of terrorism on taxation is exerted primarily through economic and structural mechanisms, notably the contraction of consumption, the disruption of trade, the decline in FDI, and the expansion of the informal sector. However, a comparative examination of the mediation results reveals that trade and consumption are the most robust transmission channels, their role being confirmed by both mediation approaches. In contrast, the influence of the informal economy and FDI is clearly established only within the framework of the instrumental variable mediation approach. In terms of economic policy implications, these results suggest that African authorities should find mechanisms to strengthen the resilience of domestic demand by supporting household purchasing power, stabilizing local markets, and securing trade flows, in order to reduce fiscal vulnerability to terrorist shocks. It is also essential to enhance the attractiveness of the business climate for foreign investors and to implement strategies to curb the expansion of the informal economy.