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Colonial Revenue Extraction and Modern Day Government Quality in the British Empire

Journal article
Authors Rasmus Broms
Published in World Development
Volume 90
Pages 269-280
ISSN 0305-750X
Publication year 2017
Published at Department of Political Science
Pages 269-280
Language en
Keywords taxation, government quality, institutions, British colonies, history, world income-distribution, sub-saharan africa, fiscal capacity, taxation, institutions, states, origins, authority, reversal, history, Business & Economics, Public Administration
Subject categories History, Economics, Political Science


The relationship between the extent of government revenue a government collects, primarily in the form of taxation, and its overall quality has increasingly been identified as a key factor for successful state building, good institutions, and by extension general development. Initially deriving from historical research on Western Europe, this process is expected to unfold slowly over time. This study tests the claim that more extensive revenue collection has long-lasting and positive consequences for government quality in a developmental setting. Using fiscal records from British colonies, results from cross-colony/country regression analyses reveal that higher colonial income-adjusted revenue levels during the early twentieth century can be linked to higher government quality today. This relationship is substantial and robust to several specifications of both colonial revenue and modern day government quality, and remains significant under control for a range of rivaling explanations. The results support the notion that the current institutional success of former colonies can be traced back to the extent of historical revenue extraction.

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