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Why Democracies Escalate the Race to the Bottom: International Trade and Government Revenues in Developing Countries

CIS Seminar Series

CIS welcomes Nita Rudra, Associate Professor of International Affairs, University of Pittsburgh.

The discussant for this seminar is Benjamin A.T. Graham, Associate Professor of International Relations, USC. 

ABSTRACT: Governments of developing countries need revenue to meet their substantial spending, development, and poverty reduction goals. How has globalization affected their ability to raise such revenues?  In this analysis, we contribute to the globalization and taxation debate by focusing on the fiscal impacts of declining international trade tax revenue in poor nations.  We hypothesize that regime type is a major determinant of revenue raising capacity after liberalization policies have been adopted.  As  international trade taxes decline- once the primary form of government revenue generation in developing economies- policymakers in democracies find it more challenging than their authoritarian counterparts to replace the revenue loss via domestic tax reform. The unfortunate consequence is that the poor bear the brunt of this revenue shortfall in democracies. Surprisingly, our results reveal that in more repressive countries, the welfare of the poor improves alongside trade liberalization.

BIO: Nita Rudra is an Associate Professor of International Affairs at the University of Pittsburgh.  Her research interests include the distributional impacts of globalization as they are mediated by politics and institutions, the impact of globalization on fiscal policies, the political foundations of different welfare regimes, and  the causes and effects of democracy in developing nations. Her most recent works appear in the  Journal of Politics, American Journal of Political Science, Studies in Comparative International Development, Comparative Political Studies,  International Organization and International Studies Quarterly.  She has a  book with Cambridge University Press entitled: Globalization and the Race to the Bottom Paradox in Developing Countries: Who Really Gets Hurt? She recently completed a one-year fellowship awarded by the Fulbright-Nehru Foundation at the Indian Institute of Management, Bangalore India.  She has also been a recipient of the International Affairs Fellowship from the Council on Foreign Relations, which placed her at the Social Development Department of the World Bank for one year.

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