Colonial legacy influences fiscal capacity and identity in Africa
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The document analyzes differences in fiscal capacity and state power between former French and British colonies in Africa. It finds that Anglophone countries generally have weaker national identities, less positive attitudes toward tax compliance, and greater issues with extortion, compared to Francophone countries. These outcomes are consistent with Britain practicing indirect rule that divided ethnic groups, while France pushed for more centralized states. Statistical analyses of Afrobarometer survey data support the hypotheses, with Anglophone countries scoring significantly lower on measures of national identity and tax compliance, and higher on payment of protection money.
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Colonial legacy influences fiscal capacity and identity in Africa
- 1. Protection money, tax compliance and colonial legacy in Africa MERIMA ALI (CMI, Norway) ODD-HELGE FJELDSTAD (CMI, Norway) BOQIAN JIANG (Syracuse University, USA) ABDULAZIZ SHIFA (Syracuse University, USA) Arusha, 8 December 2014 (Foo and Bar) Arusha, 8 December 2014 1 / 26
- 2. Fiscal capacity A broad consensus: Fiscal capacity is important for development (Bird, 1980; Tanzi and Zee, 2000). Fiscal capacity one aspect of state power (Herbest 2000; Acemoglu, 2005; Besley and Persson, 2011). Origin of state capacity? Inter-state wars. Population density and size. Ethnic fragmentation. (Foo and Bar) Arusha, 8 December 2014 2 / 26
- 3. Fiscal capacity A broad consensus: Fiscal capacity is important for development (Bird, 1980; Tanzi and Zee, 2000). Fiscal capacity one aspect of state power (Herbest 2000; Acemoglu, 2005; Besley and Persson, 2011). Origin of state capacity? Inter-state wars. Population density and size. Ethnic fragmentation. Our question: Is there a systematic difference between Francophone and Anglophone countries? (Foo and Bar) Arusha, 8 December 2014 2 / 26
- 4. Colonial legacy: Indirect vs direct rule Britain fostered “competition between ethnic groups... practiced a divide and rule strategy....purposely maintained opposing traditional structures of control in order to keep the different ethnic populations within a colony from forming a coalition to challenge British hegemony.... Thus the British structured ethnic conflict into their system” (Blanton et al 2001). France pushed “for a centralized state, which incorporated individuals from different regions and ethnic groups into a single social system, all under the control of an administrative state modeled after and controlled by the French state” (Blanton et al 2001). (Foo and Bar) Arusha, 8 December 2014 3 / 26
- 5. Outcome variable We compare differences in three outcome variables b/n Francophone and Anglophone countries: 1 The relative importance of ethnic versus national identity. 2 Citizens attitude towards tax obligation. 3 Protection against extortion (by non-state actors, e.g. gangs). (Foo and Bar) Arusha, 8 December 2014 4 / 26
- 6. Outcome variable We compare differences in three outcome variables b/n Francophone and Anglophone countries: 1 The relative importance of ethnic versus national identity. 2 Citizens attitude towards tax obligation. 3 Protection against extortion (by non-state actors, e.g. gangs). RESULT: In all of the above measures, the outcomes are consistent with the hypothesis of “direct” and “indirect” rule. (Foo and Bar) Arusha, 8 December 2014 4 / 26
- 7. Outline 1 Introduction 2 Data 3 Descriptive Figure 4 Regression results: OLS 5 Regression results: IV 6 Conclusion (Foo and Bar) Arusha, 8 December 2014 5 / 26
- 8. Figure: Francohpone (yellow) and Anglophone (red) countries in the sample. (Foo and Bar) Arusha, 8 December 2014 6 / 26
- 9. Surevey question on ethnic vs national identity: Let us suppose that you had to choose between being a Kenyan and being a ———–[R’s ETHNIC GROUP]. Which of the following statements best expresses your feelings? 1 I feel only Kenyan. 2 I feel more Kenyan than ————— [insert R’s ethnic group]. 3 I feel equally Kenyan and ————— [insert R’s ethnic group]. 4 I feel only ———– [insert R’s ethnic group]. (Foo and Bar) Arusha, 8 December 2014 7 / 26
- 10. Survey question on attitudes towards tax obligation: Please tell me whether you think that not paying the taxes people owe on their income is: 1 not wrong at all. 2 wrong but understandable. 3 or wrong and punishable. (Foo and Bar) Arusha, 8 December 2014 8 / 26
- 11. Surevey question on extortion by non-state actors: In the last year, how often have powerful people or groups other than government, such as criminals or gangs, made people in your community or neighbourhood pay them money in return for protecting them, their property or their businesses? 1 Never. 2 Only once. 3 A few times. 4 Often. (Foo and Bar) Arusha, 8 December 2014 9 / 26
- 12. Ethnic vs. national identity BEN BFACIVGIN MDG MLI NER SENTGO BEN BFA CIVGIN MDG MLINERSENTGO BEN BFA CIV GIN MDG MLI NER SENTGO BEN BFA CIVGIN MDG MLI NER SENTGO BEN BFA CIV GIN MDG MLI NER SENTGO BWA GHA KENLSO MWI NAMNGA SLETZA UGAZMB ZWE BWA GHA KENLSOMWI NAM NGA SLE TZA UGA ZMB ZWE BWA GHA KEN LSO MWINAM NGA SLE TZA UGA ZMB ZWE BWA GHAKEN LSOMWI NAM NGA SLE TZA UGAZMB ZWE BWA GHA KEN LSO MWI NAM NGA SLE TZA UGA ZMB ZWE 0.2.4.6.8 Only ethnic More ethnic Equal More national Only national Francophone Anglophone (Foo and Bar) Arusha, 8 December 2014 10 / 26
- 13. Attitude toward tax compliance BEN BFA CIV GIN MDG MLI NER SEN TGO BEN BFA CIV GIN MDG MLI NER SEN TGO BEN BFA CIV GIN MDG MLINER SEN TGO BWAGHA KEN LSO MWI NAMNGA SLE SWZ TZAUGA ZMB ZWE BWA GHA KEN LSO MWI NAM NGA SLE SWZ TZA UGA ZMB ZWE BWA GHA KEN LSO MWI NAM NGA SLE SWZ TZA UGA ZMB ZWE 0.2.4.6.8 Acceptable Understandable Not Acceptable Francophone Anglophone (Foo and Bar) Arusha, 8 December 2014 11 / 26
- 14. Protection money: I BEN BFA CIV GIN MDG MLINER SEN TGO BWA GHA KEN LSO MWI NAM NGA SLE SWZ TZA UGA ZMB ZWE .7.8.91 Francophone Anglophone People never paying protection money (Foo and Bar) Arusha, 8 December 2014 12 / 26
- 15. Protection money: II BENBFA CIV GIN MDG MLI NER SEN TGO BEN BFA CIV GIN MDG MLINER SEN TGO BEN BFA CIV GIN MDGMLINER SEN TGO BWAGHA KEN LSO MWI NAM NGA SLE SWZ TZA UGA ZMB ZWE BWA GHA KEN LSO MWI NAM NGA SLE SWZ TZA UGA ZMB ZWE BWAGHA KEN LSO MWI NAM NGA SLESWZ TZAUGA ZMBZWE 0.05.1.15 Only one A few times Often Francophone Anglophone (Foo and Bar) Arusha, 8 December 2014 13 / 26
- 16. Table: Regression results: Dependent variables rank level of national identity, tax compliance and frequency of payment to non-state actors Protection money Tax Compliance National Identity (1) (2) (3) (4) (5) (6) Anglophone 0.129 ∗∗∗ 0.147 ∗∗∗ -0.100 ∗∗∗ -0.188 ∗∗∗ -0.240 ∗∗∗ -0.278 ∗∗∗ (0.007) (0.009) (0.010) (0.012) (0.019) (0.021) Former German colony -0.035 ∗∗∗ -0.053 ∗∗∗ 0.401 ∗∗∗ (0.011) (0.017) (0.029) Log GDP per capita -0.033 ∗∗∗ 0.106 ∗∗∗ -0.005 (0.005) (0.006) (0.013) Age -0.001 ∗∗∗ 0.002 ∗∗∗ 0.003 ∗∗∗ (0.000) (0.000) (0.000) Male 0.009 0.017 ∗∗∗ 0.040 ∗∗∗ (0.006) (0.006) (0.011) Employment 0.008 -0.037 ∗∗∗ -0.026 (0.008) (0.009) (0.016) Urban 0.016 0.058 ∗∗∗ 0.028 (0.011) (0.011) (0.021) Education -0.002 0.024 ∗∗∗ 0.021 ∗∗∗ (0.002) (0.002) (0.004) Wealth 0.099 ∗∗∗ 0.027 0.012 (0.017) (0.018) (0.034) F 299.923 37.900 91.781 87.054 161.997 45.419 R-squared 0.011 0.016 0.004 0.034 0.009 0.025 Observations 35738 32167 35406 32021 35343 31672 (Foo and Bar) Arusha, 8 December 2014 14 / 26
- 17. Ordered logit Protection money Tax Compliance National Identity (1) (2) (3) (4) (5) (6) Anglophone 1.154 ∗∗∗ 1.232 ∗∗∗ -0.268 ∗∗∗ -0.515 ∗∗∗ -0.427 ∗∗∗ -0.490 ∗∗∗ (0.068) (0.077) (0.030) (0.034) (0.032) (0.036) Former German colony -0.063 -0.132 ∗∗∗ 0.711 ∗∗∗ (0.070) (0.049) (0.053) Log GDP per capita -0.189 ∗∗∗ 0.292 ∗∗∗ -0.012 (0.028) (0.018) (0.021) Age -0.008 ∗∗∗ 0.006 ∗∗∗ 0.004 ∗∗∗ (0.001) (0.001) (0.001) Male 0.067 ∗∗ 0.057 ∗∗∗ 0.064 ∗∗∗ (0.033) (0.019) (0.018) Employment 0.093 ∗∗ -0.098 ∗∗∗ -0.045 ∗ (0.045) (0.027) (0.026) Urban 0.057 0.166 ∗∗∗ 0.038 (0.059) (0.032) (0.035) Education -0.019 0.065 ∗∗∗ 0.031 ∗∗∗ (0.013) (0.007) (0.007) Wealth 0.627 ∗∗∗ 0.050 0.018 (0.102) (0.053) (0.056) Observations 35738 32167 35406 32021 35343 31672 (Foo and Bar) Arusha, 8 December 2014 15 / 26
- 18. Dummy dependent variable OLS regression Protection money Tax Compliance National Identity (1) (2) (3) (4) (5) (6) Anglophone 0.082 ∗∗∗ 0.090 ∗∗∗ -0.060 ∗∗∗ -0.116 ∗∗∗ -0.141 ∗∗∗ -0.145 ∗∗∗ (0.004) (0.005) (0.008) (0.009) (0.008) (0.009) Former German colony -0.005 -0.012 0.164 ∗∗∗ (0.007) (0.012) (0.012) Log GDP per capita -0.019 ∗∗∗ 0.068 ∗∗∗ -0.013 ∗∗ (0.003) (0.005) (0.006) Age -0.001 ∗∗∗ 0.002 ∗∗∗ 0.001 ∗∗∗ (0.000) (0.000) (0.000) Male 0.006 ∗ 0.017 ∗∗∗ 0.015 ∗∗∗ (0.003) (0.005) (0.005) Employment 0.010 ∗∗ -0.018 ∗∗∗ -0.014 ∗∗ (0.004) (0.007) (0.007) Urban 0.005 0.038 ∗∗∗ 0.008 (0.005) (0.008) (0.009) Education -0.002 0.013 ∗∗∗ 0.007 ∗∗∗ (0.001) (0.002) (0.002) Wealth 0.054 ∗∗∗ -0.005 0.015 (0.009) (0.014) (0.015) F 456.943 54.192 60.591 63.305 308.272 54.239 R-squared 0.015 0.020 0.003 0.024 0.017 0.030 Observations 35738 32167 35406 32021 35343 31672 (Foo and Bar) Arusha, 8 December 2014 16 / 26
- 19. Dummy dependent variable Probit regression Protection money Tax Compliance National Identity (1) (2) (3) (4) (5) (6) Anglophone 0.569 ∗∗∗ 0.611 ∗∗∗ -0.151 ∗∗∗ -0.294 ∗∗∗ -0.357 ∗∗∗ -0.367 ∗∗∗ (0.031) (0.036) (0.019) (0.022) (0.021) (0.023) Former German colony -0.017 -0.029 0.418 ∗∗∗ (0.037) (0.032) (0.032) Log GDP per capita -0.102 ∗∗∗ 0.173 ∗∗∗ -0.034 ∗∗ (0.015) (0.012) (0.015) Age -0.004 ∗∗∗ 0.004 ∗∗∗ 0.003 ∗∗∗ (0.001) (0.001) (0.001) Male 0.036 ∗∗ 0.043 ∗∗∗ 0.038 ∗∗∗ (0.017) (0.012) (0.012) Employment 0.052 ∗∗ -0.047 ∗∗∗ -0.035 ∗∗ (0.023) (0.017) (0.018) Urban 0.030 0.098 ∗∗∗ 0.021 (0.030) (0.021) (0.024) Education -0.008 0.033 ∗∗∗ 0.018 ∗∗∗ (0.007) (0.005) (0.005) Wealth 0.324 ∗∗∗ -0.012 0.037 (0.051) (0.035) (0.038) Observations 35738 32167 35406 32021 35343 31672 (Foo and Bar) Arusha, 8 December 2014 17 / 26
- 20. Country-level OLS Protection Money Tax Compliance National Identity (1) (2) (3) (4) (5) (6) (7) (8) (9) Anglophone 0.079 ∗∗∗ 0.096 ∗∗∗ 0.098 ∗∗∗ -0.056 -0.094 ∗∗ -0.103 ∗∗ -0.164 ∗∗ -0.106 ∗ -0.122 ∗ (0.024) (0.026) (0.020) (0.044) (0.044) (0.040) (0.063) (0.058) (0.058) Log GDP per capita -0.024 -0.016 0.069 ∗∗ 0.065 ∗∗ -0.097 ∗∗ -0.102 ∗∗ (0.017) (0.014) (0.029) (0.027) (0.041) (0.041) Landlocked country -0.025 -0.008 -0.013 -0.015 -0.116 ∗ -0.127 ∗∗ (0.024) (0.019) (0.040) (0.039) (0.056) (0.057) Ethnic fractionalization -0.001 -0.180 ∗ -0.291 (0.051) (0.102) (0.181) Pre-colonial state centralization -0.032 ∗∗∗ -0.040 ∗∗ -0.017 (0.009) (0.018) (0.027) F 10.900 4.778 7.711 1.667 2.615 3.200 6.755 5.918 4.195 R-squared 0.353 0.443 0.707 0.077 0.304 0.500 0.262 0.511 0.583 Observations 22 22 22 22 22 22 21 21 21 (Foo and Bar) Arusha, 8 December 2014 18 / 26
- 21. Relative Distance IV: Colonial expansion in Africa Resource: Late Colonialism in Africa, Wilma A. Dunaway (Foo and Bar) Arusha, 8 December 2014 19 / 26
- 22. Distance IV First Stage Regression Relative distance Log relative distance (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Relative distance to British than to French -0.160 ∗∗∗ -0.163 ∗∗∗ -0.153 ∗∗∗ -0.157 ∗∗∗ -0.155 ∗∗∗ (0.048) (0.052) (0.049) (0.050) (0.052) Log relative distance to British than to French -0.395 ∗∗∗ -0.403 ∗∗∗ -0.382 ∗∗∗ -0.392 ∗∗∗ -0.391 ∗∗∗ (0.052) (0.055) (0.055) (0.055) (0.057) Landlocked country -0.049 -0.034 -0.065 -0.091 -0.074 -0.061 -0.102 -0.106 (0.192) (0.182) (0.193) (0.203) (0.119) (0.116) (0.118) (0.126) Log GDP per capita 0.214 ∗ 0.200 0.179 0.117 0.096 0.092 (0.118) (0.123) (0.131) (0.078) (0.079) (0.084) Pre-colonial state centralization 0.049 0.034 0.066 0.063 (0.085) (0.092) (0.053) (0.058) Ethnic fractionalization -0.267 -0.053 (0.508) (0.323) Constant 0.786 ∗∗∗ 0.811 ∗∗∗ -0.771 -0.605 -0.282 0.407 ∗∗∗ 0.434 ∗∗∗ -0.417 -0.192 -0.130 (0.106) (0.146) (0.880) (0.941) (1.141) (0.061) (0.076) (0.573) (0.592) (0.717) F 10.991 5.271 5.043 3.728 2.911 56.735 27.690 20.412 16.171 12.202 R-squared 0.355 0.357 0.457 0.467 0.476 0.739 0.745 0.773 0.792 0.792 Observations 22 22 22 22 22 22 22 22 22 22 (Foo and Bar) Arusha, 8 December 2014 20 / 26
- 23. Relative distance IV correlation check Relative distance Log relative distance (1) (2) (3) (4) (5) (6) Landlocked country -0.984 -1.191 -1.072 -0.422 -0.549 -0.420 (0.778) (0.837) (0.882) (0.466) (0.498) (0.514) Pre-colonial state centralization 0.201 0.280 0.089 0.176 (0.378) (0.413) (0.225) (0.241) Ethnic factionalization 1.181 1.285 (2.204) (1.286) Constant 1.565 ∗∗∗ 1.880 ∗∗ 1.106 -0.340 -0.165 -1.007 (0.487) (0.658) (1.593) (0.292) (0.391) (0.929) F 1.598 1.031 0.757 0.818 0.616 0.744 R-squared 0.071 0.098 0.112 0.037 0.061 0.110 Observations 23 22 22 23 22 22 (Foo and Bar) Arusha, 8 December 2014 21 / 26
- 24. Country-level 2SLS Protection Money Tax Compliance National Identity (1) (2) (3) (4) (5) (6) (7) (8) (9) Anglophone 0.086 ∗∗∗ 0.104 ∗∗∗ 0.091 ∗∗∗ -0.065 -0.090 ∗ -0.115 ∗∗∗ -0.168 ∗∗ -0.101 ∗ -0.127 ∗∗ (0.027) (0.027) (0.020) (0.048) (0.046) (0.039) (0.070) (0.061) (0.057) Log GDP per capita -0.026 ∗ -0.015 0.068 ∗∗ 0.068 ∗∗∗ -0.098 ∗∗∗ -0.101 ∗∗∗ (0.016) (0.012) (0.027) (0.024) (0.038) (0.035) Landlocked country -0.026 -0.007 -0.014 -0.014 -0.116 ∗∗ -0.127 ∗∗∗ (0.022) (0.017) (0.037) (0.033) (0.051) (0.048) Ethnic fractionalization -0.003 -0.185 ∗∗ -0.294 ∗ (0.044) (0.087) (0.154) Pre-colonial state centralization -0.032 ∗∗∗ -0.040 ∗∗∗ -0.017 (0.008) (0.015) (0.022) Shea Partial R2 0.739 0.729 0.746 0.739 0.729 0.746 0.743 0.736 0.751 R-squared 0.350 0.440 0.705 0.075 0.303 0.497 0.262 0.511 0.583 Observations 22 22 22 22 22 22 21 21 21 (Foo and Bar) Arusha, 8 December 2014 22 / 26
- 25. IV Predicted value: Protection Money SEN MDG GIN MLI CIV BEN TGO BFANER GHA MWI SWZ TZA ZWE NAM ZMB BWA UGA KEN NGA SLE LSO 0.1.2.3 −.5 0 .5 1 1.5 Fitted values (Foo and Bar) Arusha, 8 December 2014 23 / 26
- 26. IV Predicted value: Tax Compliance SEN MDG GIN MLI CIV BEN TGO BFA NERGHA MWI SWZ TZA ZWE NAM ZMB BWA UGA KEN NGA SLE LSO .3.4.5.6.7 −.5 0 .5 1 1.5 Fitted values (Foo and Bar) Arusha, 8 December 2014 24 / 26
- 27. IV Predicted value: National Identity SEN MDG GIN MLI CIV BEN TGO BFA NER GHA MWI TZA ZWE NAM ZMB BWA UGA KEN NGA SLE LSO 0.2.4.6.8 −.5 0 .5 1 1.5 Fitted values (Foo and Bar) Arusha, 8 December 2014 25 / 26
- 28. Conclusion Both citizens’ attitude toward tax obligation and national identity appear to be weaker in Anglophone countries. IV results reaffirm this pattern. Caution: the exact mechanism is not identified. (Foo and Bar) Arusha, 8 December 2014 26 / 26