The Impact of Globalization on Tax Capacity and Tax Effort With an Emphasis of Economic Indicators in Selected Countries: A Panel Threshold Regression Approach

In modern world, despite of mutual dependency, economic development especially in developing countries would be very challenging, without global active interaction. Hence, performing successful economic development plans is strongly dependent on international economic interaction and firmly is influenced by economic globalization phenomena. The purpose of this paper is investigating the globalization effects on tax capacity and tax effort by emphasizing on economic indicators in selected developing countries. For this purpose, we use a panel threshold regression approach during 1998-2014. Based on findings, the threshold value for globalization index is estimated 3. 87%. Also, results show if the growth of the globalization index in a developing country is more than 3.87 percent, the effect of industry value added, population growth, literacy rate and per capita income on the capacity and tax efforts would be positive; however, the effect of agriculture value added, inflation and Gini ratio on the tax capacity and tax effort would be negative. Moreover, if the rate of globalization growth is considered less than 3.87%, the effect of these variables will reduce. Finally, with respect to low threshold globalization index in I. R. Iran, this paper recommendation is speeding up to join the globalization and planning to achieve more open economy