Fortin 8
one such aspect is measured through revenue extraction systems. Indeed, it is a
commonly held position in the literature that revenue extraction is a core component of
state-building, since it is one of the principal means to finance activities (Ardant 1975;
Easter, 2002; Schumpeter in Brownlee, 1996; Tilly, 1990, 2004).
Thus it is not sufficient that a state possess important human and material
resources for the production of wealth: a state also must be able to effectively make use
of them. A direct empirical grasp of the concept of political capacity is not possible. As
Kugler and Domke (1986) argue, when we look at absolute revenues, wealth is not
necessarily a good indicator of mobilization: wealthier countries can tax and borrow more
from their population than can poorer nations. In a similar understanding, countries that
offer larger social programs generally collect more revenues than those who do not
provide services on such a wide-ranging spectrum. Likewise, societies endowed with
mineral resources generate more wealth than nations with different, less profitable,
attributes. Therefore, even though gross domestic product (GDP) provides a crucial
indicator to compare the aggregate performance of countries, it only measures activity in
absolute terms, whereas relative measures are needed to report on the variation in reach
and extraction relative to performance (Arbetman and Kugler, 1997).
To place countries in an even economic field, the relative political extraction
(RPE) measure takes the ratio of what a government actually extracts to what such a
government should be able to extract given the wealth of the society. Actual extraction
captures the share of total economic activity that the government extracts for expenditure
or investment. More specifically, this is captured by the share of tax revenue (excluding
social programs) collected as a percentage of a country’s GDP. The more revenues a
state collects, the more it is able to reinvest in the country. By contrast, the expected
extraction is the level of government revenues predicted strictly by socioeconomic
considerations. Expected extraction is estimated with an econometric model (using the
following formulas) that depicts the main economic determinants of fiscal resources
given the level of development of a society.
Relative Political Extraction (RPE) = Actual Tax ratio / Taxable capacity
Where:
Convention