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Globalization and Taxation in the OECD: Evidence from a New Indicator of Integration

Author: AXEL DREHER
Published in PFM, Vol. 5 No. 3

The paper presents an index of globalization covering its three main dimensions: economic
integration, social integration, and political integration. Using panel regression for the period 1970-
2000 the paper analyzes whether globalization has influenced OECD countries’ implicit tax rates on
labor, consumption and capital. The results show that globalization did not decrease the leeway for
independent economic policy. Globalization even increased implicit tax rates on capital, while tax
rates on consumption and labor are unaffected.

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