EFFECT OF TAX REVENUE ON STRUCTURAL CHANGE: A PANEL THRESHOLD ANALYSIS OF AFRICAN COUNTRIES

This research paper investigates the effect of tax revenue on structural change for 46 African countries from 2000 to 2022. The empirical research results show that the relationship between structural change and tax revenue is not linear, and the entire sample can be split into three regimes, where tax revenue as a percentage of GDP is used as the threshold. In all three regimes, tax revenue has a positive effect on structural change. The direction of the effect does not change, but the effect becomes weaker upon reaching the double threshold value of 1.18%. and 4.62%. Yet, the findings of this study may provide useful guidelines for policymakers in African countries. They should pay attention to tax revenue, which theoretically has a significant impact on structural change. They need to consider a maximum rate to increase the benefit of tax revenue to structural change towards the positive transformation of Africa.

DOI: https://doi.org/10.47743/rebs-2026-1-0002