Economic reforms in East African countries: The impact on government revenue and public investment

In the empirical literature on the revenue consequences of trade liberalization, most studies have focused on cross-country analysis. Because these studies are static in nature, they have not addressed the short-run and long-run dynamic public revenue and public investment consequences of economic reforms in developing countries. This dissertation contributes to the literature employing a dynamic time series analysis of the three East African countries-Tanzania, Kenya and Uganda. The dissertation uses a co-integration and error-correction framework to distinguish between short-run and long-run relationships. The results indicate that trade reforms in Tanzania, Kenya and Uganda had varying impacts on government revenue, tax performance and public investment spending in these three countries. It is demonstrated that trade reforms had adverse impact on government revenue in Uganda, but not in Tanzania and Kenya. The results also show that Tanzania has had the weakest overall tax revenue and public investment. Poor tax performance and erratic revenue generation have been problems in all three countries, contributing to adverse impacts on public investment spending