PhD defence: Aguima Aimé Bernard Lompo

Aguima Aimé Bernard Lompo
Université Clermont Auvergne, CERDI

Financial Development, Tax Revenue Mobilization and Public Sector Efficiency

Examiners

Jean François Brun, Associate Professor, HDR, Université Clermont Auvergne, CERDI, France, Supervisor
Jean Louis Combes, Professor, Université Clermont Auvergne, LEO-UCA, France, Examiner
Roland Kangni Kpodar, Deputy Division Chief , Département de la Stratégie, des Politiques et de l’Examen du Fonds monétaire international, Examiner
Eugenie W. H. Maiga, Professor, Université Norbert Zongo, Burkina-Faso, Rapporteur
Mary-Françoise Renard, Professor Emeritus, Université Clermont Auvergne, CERDI, France, Supervisor
Antonio Savoia, Professor, The University of Manchester, Royaume-Uni, Rapporteur

Abstract

Given the recent fiscal challenges and the growing need to provide more public goods and services, especially in response to income reductions following the 2008 financial crisis and the COVID-19 pandemic, this thesis thoroughly examines the crucial role of economic factors, such as financial development, in shaping fiscal policy. It utilizes statistical and econometric methods to analyze mechanisms through which developed and developing countries can efficiently allocate public resources for development and offers policy recommendations for developing economies. In Chapter 1, we contribute to the literature on public sector efficiency using a comprehensive dataset spanning from 1990 to 2017. We compute efficiency scores for various sectors, revealing positive correlations with globalization, productivity, and institutional quality. Tobit analysis shows consistent impacts across economies, with tax revenues negatively affecting efficiency in advanced economies. The study suggests emphasizing globalization benefits, promoting productivity, and enhancing institutional quality for efficient management. It underscores the importance of fiscal governance and proposes future research avenues on government efficiency and the impact of fiscal reforms. In Chapter 2, we investigate the impact of financial development on public sector efficiency globally. Efficiency scores are computed for 158 countries from 1990 to 2017, revealing a positive link between financial development and public expenditure efficiency. Robustness checks confirm these results and explore the channels through which financial development influences efficiency. We emphasize the importance of financial stability in mitigating fiscal volatility. Policy implications recommend structural reforms to promote financial development, offering opportunities for social improvement in developing countries. Chapter 3 delves deeply into the impact of financial sector development on domestic tax revenue mobilization in 49 developing countries from 1995 to 2017. We highlight a more robust positive relationship with non-resource tax revenues, particularly in low-income countries with high financial openness and low public debt. The analysis identifies the significant influence of various aspects of financial development on tax mobilization. Policy recommendations stress the importance of combining financial development with sound fiscal or monetary policies, especially in open and financially developed contexts, to maximize its impact on tax revenue mobilization and overall social welfare. In Chapter 4, we examine the impact of financial market access on tax revenue instability in developing countries using data from 30 countries from 1996 to 2020. Employing the GMM-system estimator reveals a causal relationship between this instability and sovereign rating and bond spreads. Theoretical implications highlight the importance of financial market access in mitigating tax revenue volatility, suggesting that reforms promoting financial development could enhance the effectiveness of fiscal policies in these countries.

Keywords

Public finances, Fiscal policy, Public sector performance, Efficiency of public spending, Parametric approach, Tobit model, Financial development, Resource mobilization, Generalized method of moments (GMM), Economic growth, Development financing, Public expenditure, Tax revenues, Access to financial markets, Tax revenues instability, Institutional quality, Developing countries, Developed countries

https://theses.fr/s363350