Resource mobilisation, institution and inclusive growth in Africa: Evidence from spatial analysis

Abstract This study accommodates spatial effects in the nexus between tax resource mobilisation (TRM) institutions and inclusive growth using panel data from 48 African countries. By adopting the spatial Durbin‐fixed effect model, the study shows that spatial dependence and interaction matter when modelling TRM, institutions and inclusive growth relationships. It is also explicit that various disaggregated and aggregated tax components have not played significant roles in increasing inclusive growth in Africa, except property tax. The result suggests the need to harness the role of property tax for revenue generation in stimulating inclusive growth in view of its growth benefits over its distortions. Further evidence shows that all individual proxies of African institutions dampen inclusive growth. These results also pinpoint the weak governance structures that constitute huge constraints on the participatory tendencies of economic growth and reflect the institutional exclusiveness inherent in Africa. Regarding the interactive effects of institutions and TRM on inclusive growth, findings further reveal that existing institutions in Africa weaken the tax administration structures in propelling TRM to actualize inclusive growth. The study informs policy implications.