Anne Mette Kjær, Ole Therkildsen, Lars Buur, Michael Wendelboe Hansen · 2021
The Extractive Industries and Society · Elsevier BV

When ‘Pockets of effectiveness’ matter politically: Extractive industry regulation and taxation in Uganda and Tanzania

It is a common view that states in the developing world with substantial extractive natural resource discoveries may not have the capacity to tax and regulate multinational companies in the sector. In this article, we show that ruling elites in recently resource-rich Tanzania, and in Uganda – expected to become resource-rich in the foreseeable future - have learned from the resource curse: they seek to construct ‘pockets of effectiveness’ (POEs) to regulate and tax natural resources. We explain the political incentives to create such pockets by combining insights from the POE and the Political Settlement literatures. We argue that POEs are likely to be established in emerging resource-rich countries with three characteristics: some degree of competitive elections; widespread voter expectations of future natural resource prosperity; and absence of powerful domestic firms in the sector who can resist taxation. The political benefits of such POEs are higher revenues that can boost government spending power and, hence, political legitimacy. These outweigh the political costs of establishing POEs, namely rents and patronage foregone. This insight is missed in much of the writings on the impact of natural resource wealth in African countries.

Full publication is available on: DOI 10.1016/j.exis.2020.12.010

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Lars Buur

Lars Buur
Roskilde University

Lars Buur has been Associate Professor in the Department of Social Sciences and Business at Roskilde University, Denmark, since 2014. His research focuses on the political economy of extractive natural resource governance and post-conflict state formation in Southern and Eastern Africa. From 2015-2020, he was Programme Coordinator of the HIERARCHIES of Rights research programme on struggles related to large-scale investments into natural resources in Sub-Sahara Africa. In the past, Lars Buur has worked in several positions at the Danish Institute for International, the Nordic Africa Institute Uppsala, the Centre for Development Research, and Aarhus University.

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