Revenues, State Formation, and the Quality of Governance in Developing Countries

Sources of state revenue have a major impact on patterns of state formation. This proposition from fiscal sociologyis valid and convincing in the context of western European history and comparisons among contemporary states in the South. This article investigates the extent to which we can conclude that the quality of governance in contemporary developing countries might improve if states were more dependent for their financial resources on domestic taxpayers. The radically different context of contemporary third-world states cautions against too firm conclusions.