Reforming the Developing World Essay

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AFRICA

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Africa: Public finance and legislative procedures

Financially-strapped African nations must make difficult choices when calculating the opportunity costs of different decisions they must make regarding financing. The goals of this hypothetical African nation are to encourage personal savings on the part of citizens but also to encourage foreign investment. One of the suggested reforms has been to institute a property tax. While property taxes have been frequently used in the United States to fund education, this paper will suggest alternative prioritization to accomplish national goals.

Property taxes

Property taxes are often controversial as a source of soliciting economic revenue. On one hand, they have the advantage of not taxing the income or the consumption of the poorest members of society. There is the presumption that those who are able to own property have at least some subsistence income. However, merely because someone has a modest amount of property does not necessarily mean he or she is wealthy and such a proposal could result in undue taxation upon poorer, small, subsistence farmers. Those with property (usually residents in agrarian locations) might begin to resent those living in urban areas, creating class conflict as well.

Using property taxes to fund local initiatives such as education is particularly problematic, given that this inevitably means more funds will be allocated to wealthier districts which need it the least.

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In China (another developing world nation which has seen a stratospheric increase in its prosperity), there has been considerable criticism of the government for being overly reliant upon selling land as a source of revenue and it has been suggested that property taxes should be used as an alternative source of financing investment in the infrastructure. "There is no doubt that revenue from land sales has been the backbone of local government coffers… The problems with this are obvious. There is a limit to the quantity of sellable land…local governments' fiscal decisions are often made on the assumption that land prices will continue to appreciate. When property prices do not go up anymore, the trading volume of land will drop and severely affect the spending ability of local governments" (Young & Xia 2013). However, the fact that the value of land determines revenue is a problem with property taxes as well given if land values go down so will revenue.

Fighting corruption

Corruption exercises a considerable drain upon most African economies. One reason there is a strong reluctance to invest amongst Westerners today is because of the tremendous costs in dealing with corruption in the region. "Corruption tends to produce a variety of negative socio-economic and political outcomes, such as socio-economic underdevelopment (e.g., an increase….....

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