Are Beholden Rulers Enlightened Rulers? Uniting Democratic and Fiscal Perspectives on Infant and Child Mortality

Many scholars contend that democracy has a significant and positive effect on the provision of public services. Alternately, the fiscal theory of the state predicts that if the state is beholden to the citizenry for revenue, it will have economic incentives to defer to citizens’ preferences and enact policies that benefit broad segments of society. I argue that the incentives to provide public services are a function both of democratic institutions and of the costs associated with enforcing compliance with various revenue-generating instruments. When these costs are low, such as when states are reliant on non-tax revenue and taxes on international trade, the incentives to provide public goods are low. When these costs are high, such as with consumption taxes and taxes on income, capital gains and assets, the incentives to provide public goods are greater. Using time-series cross-sectional data on 157 countries from 1980-2002, I find that the ratio of high-cost to low-cost revenue (what I call the quasi-voluntary ratio) is negatively associated with infant and child mortality. Moreover, when the nature of government revenue is adequately modeled, the strong relationship linking GDP per capita and infant mortality disappears. The analysis supports both democratic and fiscal notions of accountability and suggests that democratization should be accompanied by reforms that increase the fiscal dependence of the state on its citizenry in order to enjoy advances in human well-being.