FACTORS AFFECTING TAX REVENUE FOR DEVELOPMENT IN DEVELOPING COUNTRIES IN ASEAN, AFRICA, AND EUROPE

Abstract

This study examines the effects of foreign direct investment (FDI), population, trade openness, and inflation on tax revenue in developing countries across ASEAN, Africa, and Europe. Tax revenue is proxied by the tax-to-GDP ratio and transformed into its natural logarithm for estimation. The study uses secondary data from the World Bank, the International Monetary Fund (IMF), and the Organisation for Economic Co-operation and Development (OECD). The sample covers 22 developing countries during 2016-2024 and forms an unbalanced panel of 193 country-year observations. Panel regression is estimated in EViews. The Chow and Hausman tests select a country fixed-effects model. The results show that FDI has a negative but statistically insignificant association with tax revenue, while population has a positive and significant association (coefficient 0.324537; p = 0.0046). Trade openness is also positive and significant (coefficient 0.001480; p = 0.0284). Inflation is negative but statistically insignificant. The adjusted R-squared is 0.963210, reflecting the explanatory contribution of the regressors, the 2020 control variable, and country fixed effects. Overall, the findings indicate that population and trade openness are the variables most consistently associated with tax revenue in the sample.