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  • Print publication year: 2010
  • Online publication date: June 2012

2 - Why Fiscal Regimes


The history of state revenue production is the history of the evolution of the state.

– Margaret Levi (1988, 1)

All mineral states … are rentier or distributive states.

– Terry Lynn Karl (1997, 49)

The conventional literature on the resource curse defines the problem of mineral-rich states as essentially a fiscal one. In short, because they can derive income exclusively from external rents, such states have no need to develop a viable tax system to tap into domestic sources of revenue. Fiscal independence from the domestic population, in turn, affords governing elites the freedom to distribute the state’s income as they please. Mineral-rich states, therefore, are often classified as both rentier states and distributive states.

This focus on fiscal regimes, particularly the extractive side, is understandable considering the overwhelming emphasis on taxation in the general political economy literature. Beginning with Max Weber, it is widely recognized that the ability to generate revenue is a minimal requirement for modern statehood. Simply put: without revenue, state leaders would be unable to perform the basic tasks of staffing the bureaucracy, maintaining social order, and securing their borders (see Levi 1988, Tilly 1975), let alone to fulfill the broader goal of promoting societal welfare (see Skocpol and Amenta 1986). Not surprisingly, then, some have defined the state solely “in terms of [its] taxation powers” (Lieberman 2002, 92 referring to North 1981, 21).

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