Political economy issues of taxation in Latin America

The political economy of Latin America is a crucial issue. In the last decades many Latin American countries have experienced a democratic transition, but poor economic performances. In particular, contrary to the predictions of the political economy literature on democracy and economic development, fiscal pressure has remained low, especially income taxes, despite the democratic transition. This puzzling evidence can be reconciled with political theories, if we include the role played by vested interests, financial sector and populist economic policies.