Trade openness,tax reform and tax revenue in developing countries

This article investigates empirically whether the effect of tax reform (involving the progressive replacement of trade tax revenue with domestic tax revenue) in developing countries' tax revenue performance (measured by tax revenue‐to‐GDP ratio) depends on the degree of trade openness of these countries. The analysis has used an unbalanced panel data set of 95 developing countries over the period 1981–2015 and the two‐system GMM approach. Results suggest that tax reform is positively and significantly associated with tax revenue performance in developing countries, with the magnitude of this positive effect increasing as countries experience a higher development level. Additionally, and more importantly, countries that further open up their economies to international trade enjoy a higher positive effect of tax reform on tax revenue than countries that experience a lower degree of trade openness. Therefore, these findings should help dissipate the concerns of policymakers in developing countries that greater openness to international trade would further erode their tax revenue, including by lowering their international trade tax revenue. In fact, the implementation of an appropriate tax reform in the context of greater trade openness would generate higher tax revenue, while concurrently allowing countries to reap the well‐known benefits of international trade.     

The true art of the tax deal: Evidence on aid flows and bilateral double tax agreements

Of a total of 2,976 double tax agreements (DTA s), some 60% are signed between a developing and a developed economy. As DTA s shift taxing rights from capital‐importing to capital‐exporting countries, the latter inherently benefit more from the agreements. In this paper, we argue that capital exporters use foreign aid to incite capital importers into signing DTA s. We demonstrate in a theoretical model that in a deal, one country does not trump the other, but that the deal must be mutually beneficial. In the case of an asymmetric DTA , this requires compensation from the capital‐exporting country to the capital‐importing country. Examining DTA s that are signed between donor and recipient countries between 1991 and 2012, and using a fixed effects Poisson model, we find that bilateral foreign aid commitments increase by 22% in the year of the signature of a DTA . Evaluated at the sample mean, this translates into around US$ six million additional aid commitments in a DTA signatory year.     

Investment Flows,Economic Growth,and Corruption in African Countries: An Analysis

ABSTRACT

The analysis of corruption in international business is a relatively new phenomenon, and for the past two decades, many studies have attempted to capture the economic impact of the corruption in a country. However, most of these studies have concentrated their analysis to the experiences of the developed countries. None or very few of the current works have addressed the corruption issue in the context of foreign direct investment and economic growth in the developing countries. This work examines theoretically, as well as empirically, the incidence of corruption in the context of foreign direct investment in the developing countries, especially several African countries that signed a treaty to reduce the incidence of corruption in their respective countries.     

Exploring SME cybersecurity practices in developing countries

The continued use of information technology systems by small and medium enterprises (SMEs) in developing countries has the potential to bring significant benefits but, at the same time, expose them to online cybersecurity threats. Addressing these threats is, therefore, of paramount importance for developing countries, not only because SMEs are seen as the vehicle for employment and job creation, but because research on SMEs and cybersecurity in this context is limited. This study is a contribution toward addressing this gap.

The purpose of this study is, therefore, to explore SME cybersecurity practices and the challenges they face in developing countries. The goal is to sensitize practitioners and government institutions about the challenges and practices faced by SMEs, so that the various parties can work collaboratively in providing context-specific solutions to address these challenges and improve current cybersecurity practices. The study follows a qualitative enquiry approach to solicit information from three South African SMEs that had implemented cybersecurity practices. The findings show that an SME’s perception of cybersecurity is constrained by internal factors of budget, management support, and attitudes. Further findings show that SMEs’ cybersecurity practices are affected by the landscape of cybersecurity, as well as institutional pressures.     

Developing countries in competition for foreign investment

This study analyzes the competition for foreign direct investment (FDI) among countries at different stages of development. It is assumed that domestic companies in a more-developed country use more capital in production and that wages in a less-developed country are lower. Countries can compete for FDI by increasing the supply of public inputs in the economy, in addition to (or instead of) offering subsidies or tax reliefs to foreign investors. The results reveal that if governments of competing countries are not allowed to discriminate between domestic and foreign firms, there may be situations in which a less-developed economy will attract FDI depending on the labor cost differential and the responsiveness of foreign investor's and domestic companies' output to changes in the supply of public inputs. If tax discrimination between domestic and foreign firms is permitted, both countries will optimally raise the supply of public inputs, but the more-developed country will always win the foreign investment despite higher labor costs. Thus, governments of less-developed countries may have an incentive to work on an international agreement to disallow tax discrimination.     

Estimating the impact of trade specialization and trade policy on poverty in developing countries

This paper investigates the impact of trade specialization on poverty. The empirical findings show that in developing countries manufacturing exports contribute to poverty reduction. But agricultural exports have a more significant effect on poverty in low-income countries. The analysis also confirms that trade specialization reduces poverty but under specific trade specialization patterns and policy conditions.     

Internationalization of multinational banks: a study of foreign direct investment in seven Latin American countries

The article attempts to explore and contrast the different factors that influence the foreign direct investment (FDI) decisions of multinational banks. Employing eclectic theory, an estimation model with panel data from seven Latin American countries is set to test the proposed hypotheses. The results highlight an increase in foreign assets, removal of banking restriction, banking concentration, and capital cost differential in the local banking system as determinants of specific location advantages for attracting banking FDI. Other factors such as cultural proximity and crisis also have a significant impact on banking FDI. Discussions and implications are debated before conclusions are drawn for a future research agenda.     

The spatial redistribution of Japanese direct investment in the United Kingdom between 1991 and 2010

Japanese firms have a firmly established reputation as influential foreign investors, originating from the surge of foreign direct investment into North America and Europe during the 1980s. This paper examines trends in Japanese corporate behaviour in the United Kingdom, a key investment destination for Japanese firms, over the period 1991 to 2010. Our ‘demographic’ analysis of Japanese firms' investments includes both investment and exit strategies. It is found that Japanese firms have reconfigured their UK presence in response to a rapidly changing market environment, with an enduring proclivity to cluster, notwithstanding government incentives intended to channel investment towards specific regions of the country.     

刍议国际投资协定中的税收仲裁机制——以中国的缔约实践为例

为减少与包括WTO协定和避免双重征税协定在内的其他涉税条约争端解决机制之间的冲突,特别是,避免原有的投资者与国家间投资仲裁机制对本国税收主权的过度限制,中国晚近缔结的国际投资协定引入了专门的税收仲裁机制。这一尝试值得期许。然而,该税收仲裁机制仍存在诸多的不足,这可能会削弱其应有的作用。对此,中国应参考有关国家的实践,作出相应的调整。     

Balance sheet effects and the choice of exchange rate regime in developing countries

We investigate the choice of regime amongst hard pegs, soft pegs, managed floats and independent floats for a panel of developing countries. There is evidence of a matched ordering of regimes and country characteristics. We find some evidence for the ‘balance sheet' hypothesis that foreign liabilities in the banking system and foreign debt are associated with less exchange rate flexibility, particularly when a ‘de facto’ regime classification is used. Easily the best predictor of a country's current regime is its regime in the previous year.     

Financial globalisation and the labour share in developing countries: The type of capital matters

In this paper, we investigate how de facto financial globalisation has influenced the labour share in developing countries. Our main argument is the need to distinguish between different types of capital in this context as they differ in their effect on the host countries' production process and vary concerning their bargaining power vis-à-vis labour. Our econometric analysis of the impact of foreign direct versus portfolio investment in a sample of about 40 developing and transition countries after 1992 supports this claim. Using different panel data techniques to address potential endogeneity problems, we find that foreign direct investment has a positive effect on the labour share in developing countries, while the impact of portfolio investment is significantly smaller and potentially negative. Our results also highlight that de facto foreign investment cannot explain the decline of the labour share in developing countries over the investigated period.     

Public education in developing countries: Cost-effectiveness of education policies and endowments growth

The article analyses the general equilibrium effects of education as a user and producer of resources considering some features of the sector typical in developing countries, such as the presence of inefficiencies, in a model that nevertheless remains close to the Heckscher–Ohlin paradigm. Short- and long-term effects of education are considered and it is shown that the overall effects are linked to the efficiency with which endowments are produced. The analysis has implications for policymakers in developing countries with failing educational systems, as it suggests a relation between cost-effectiveness of policies and growth and not between enrolments and growth or between public expenditure in education and growth as it is usually tested in growth regressions.     

Investigating the causality links between environmental quality,foreign direct investment and economic growth in MENA countries

This paper investigates the causal relationship between environmental quality, Foreign Direct Investment and economic growth using simultaneous-equation panel data VAR model a panel of 17 MENA countries over the period 1990–2012. Our empirical results pointed out that there is a unidirectional causality running from both FDI stocks and CO₂ emissions to economic growth. They also indicate the existence of unidirectional causality running from economic growth to CO₂ emissions. However, the results support the occurrence of unidirectional causality from FDI stocks to CO₂ emissions. Our empirical result confirms the hypothesis of neutrality for the Environment-GDP link. There is bidirectional causality from ${\text{CO}}_2$emissions and economic growth, and a bidirectional causal relationship between FDI stocks and CO₂ emissions. For the global panel, we show that the existence of a unidirectional causality running from FDI stocks to economic growth; a bidirectional causality between economic growth and CO₂ emissions; as well as a bidirectional causality between FDI stocks and ${\text{CO}}_2$emissions.     

Foreign Direct Investment and Training in the Host Country: The Tariff-Jumping Argument Revisited

We analyze the direct investment versus export decision of a multinational firm in competition with a potential entrant in a host country. We consider a workers' skills asymmetry between the host and the multinational home countries. We also give the multinational the possibility to train all (or a part of) the hired workers when investing. We show that an improvement in the workers' skills in the host country does not systematically increase the multinational incentive to invest. We also demonstrate that the tariff-jumping investment can improve the welfare of the host country even if it excludes the local firm from the market.     

On the relationship between public and private spending in developing and developed countries

Using annual data, the paper studies the time-series evidence regarding the effectiveness of government spending. The emphasis is on the relationship between public spending and private spending. The objective is to identify whether the effects of public spending on macro variables are reinforced or mitigated through the spillover effects on private spending. The evidence attests to the importance of stimulating private spending to maximize the positive effect of an increase in public spending on real growth. Concerns about the crowding out effects of higher public spending on private demand are more dominant in developing countries. Moreover, the scope for government spending to determine aggregate uncertainty is much larger in developing countries. Overall, the evidence attests to the importance of managing trends and variability of government spending towards maximizing the fiscal multiplier. The paper's evidence spells out potential to maximize the fiscal multiplier via private spending and concerns about the ineffectiveness of fiscal policy where crowding out concerns dominate.     

GDP growth determinants and foreign direct investment causality: the case of Iran

Given the economic conditions in Iran and the need to accelerate its economic growth, there is a rising interest in examining the variables that fuel its GDP growth. The scant literature on economic growth in Iran is composed of only a few scholarly studies that investigate this nation's GDP growth. However, none of these studies has examined the causality between GDP growth and its determining elements. The purpose of this study is: (1) to determine the economic variables that contribute to Iran's GDP per capita growth over time, and (2) to examine the causality between foreign direct investment and the relevant variables that are included in the model. To achieve these goals the study uses a model that is based on the postulates of de Mello. The results indicate that: (1) the major determinants of GDP per capita growth in Iran are value added growth and domestic investment growth; (2) there is no causal relationship between foreign direct investment growth and GDP per capita growth in Iran in either direction; and (3) there is no causal relationship between foreign direct investment growth and value added growth in Iran in either direction.     

Foreign ownership and the export and import propensities of developing‐country firms

This paper uses micro‐data from the World Bank Enterprise Surveys 2002–06 to investigate how foreign ownership affects the likelihood of manufacturers in developing countries to export and/or import either directly or indirectly. Applying propensity score matching to control for differences across firms in terms of labour productivity and other characteristics, we find that foreign ownership raises the propensity of a firm to export by over 17 and the propensity to import by more than 13 percentage points. The effects are even bigger for countries with the lowest per capita income and institutional quality.     

On the Irrelevance of Mercosur: Evidence From Foreign Direct Investment

ABSTRACT

This article utilizes data from more than 100 countries over 30 years to identify the key factors that make a country more attractive to foreign direct investment (FDI). We find evidence that a country's potential marginal returns to capital, available infrastructure, degree of trade openness, labor force qualification, and macroeconomic stability have a positive impact on FDI inflows. Our estimates capture a change in the role played by trade protection and an increase in the importance of human capital as globalization progressed. An application of our models illustrates why Mercosur countries have underperformed their peers in attracting FDI.     

外商直接投资在黑龙江省区域创新系统中的角色与发展对策

近年来，区域创新系统的研究正在逐步发展深化，外商直接投资的全球化发展给世界各国区域创新系统提供了机遇。黑龙江省区域创新系统科技投入少，资源利用差，技术创新能力弱。应拓宽融资渠道，提高外商R＆D投入强度；推动区域产业群发展，形成竞争优势；加快先进服务技术的扩散，提升整个区域的科技竞争力。     

跨国公司在天津直接投资特点分析

改革开放以来，天津利用外资取得了令人瞩目的成绩，吸引了众多的跨国公司来津投资。国际著名的跨国公司在天津直接投资有以下六大特点：一是投资进入方式逐步以独资为主；二是投资规模大，增资势头强劲；三是直接投资主要集中于资本密集、技术密集及知识密集型行业；四是投资领域逐步拓宽，第三产业投资上升；五是配套产品国产化带动相关产业发展；六是外商投资聚集效应明显。