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Foreign investment in telecommunications in Latin America has amounted to over $110 billion since 1990, more than for all other developing countries combined. Only one in four of the poorest Latin Americans has a telephone line; competitive markets and policies promoting access can help narrow the connectivity gap between rich and poor.
How important are differences in corporate taxation for the investment decisions of multinational enterprises (MNEs)? Over the past decade, interest in this issue has been growing in parallel with the increasing mobility of capital and internationalisation of businesses. Standard models of the MNEs predict that corporate taxation can influence foreign direct investment (FDI) by creating a wedge between the pre- and post-tax returns on investment. The relevant tax wedge, however, depends on whether MNEs’ investment is incremental or involves the creation of entirely new plants.
Becoming a successful city involves achieving a high investment/high return equilibrium, just as much as it does for the most successful businesses. Success in the open knowledge driven global economy requires places to be truly distinctive, appealing and productive. Just as firms must innovate and invest to succeed, cities have to adjust, reinvent, and differentiate themselves. They have to change the old patterns of land and resource use, and connect assets with opportunities in new ways and over new spaces. They must modernise infrastructure and build up human capital. This can have positive impacts on entrepreneurship, innovation, skills, and other factors of growth. But this involves adjustment costs, in the form of investment to re-engineer the city for the new economic functions and flows that it must facilitate. It can take 30-50 years of re-investment to fully recalibrate a city from the industrial mode to the knowledge mode...
The transport sector is almost fully dependent on oil-derived products and in both the United States and in Europe this sector contributes with about one third of total energy consumption and about 30 % of the CO2 emissions. The transport sector is forecasted to contribute with 90 % of the increase in CO2 emissions projected for EU in 2010. With the increasing use of oil for transport in China, India and other Asian countries the rush for oil has resulted in increasing prices on oil and a push for production of oil substitutes. Finding alternatives is a key issue and biofuels are expected to be the easiest alternative fuel as no significant changes in the infrastructure or in established vehicles and engines are required. Biomasses play a unique role as raw materials for the production of transport fuels as outlined by US Department of Energy. It is important to understand that biofuels are not always “bio”- and in some situations large scale production will lead to a larger over-all use of fossil fuel and thereby a larger emission of carbon dioxide. Biodiesel produced from rape seed and bioethanol produced from corn might be questionable when it comes to the net energy produced. Furthermore, production of these types of biofuels will occupy land, which might be used for food production and it can further lead to loss of rainforest or deforestation in parts of the world where the new opportunities opens for new developments.
A recent trend in individual accounts schemes is the introduction and expansion of investment alternatives to plan members. The goal of investment choice is to enable plan members to select the optimal investment portfolio that matches their particular risk-return preference and ultimately, maximizes their retirement income. This document focuses on some key analytical and policy issues regarding investment choice by pension plan/fund members in occupational defined contribution and personal pension arrangements during the accumulation stage. The document covers the following selected OECD countries, Australia, Czech Republic, Hungary, Ireland, Italy, Mexico, Poland, Slovak Republic and Turkey. Furthermore, it covers some non-OECD countries such as Chile, Estonia, Hong Kong (China), Israel, Latvia, Peru, Russia and South Africa.
Governments have influenced the development of bioenergy, particularly liquid biofuels (ethanol, biodiesel and pure plant oil used as a fuel), for several decades. This paper discusses the economics of biofuels and provides an overview of current policy measures to support their production and consumption. It discusses also how the different policies supportive of biofuels interact with broader agricultural, energy, environmental and transport policies, and the relative effectiveness of biofuels in achieving objectives in these areas. The paper concludes with several recommendations on further research.
Political involvement in administration is essential for the proper functioning of a democracy. Without this an incoming political administration would find itself unable to change policy direction. However public services need protection against being misused for partisan purposes, they need technical capacity which survives changes of government, and they need protection against being used to impair the capacity of future governments to govern.
The paper looks at financial market innovation and how it has led to the rapid growth of structured products. It explores the mechanisms that come into play as assets inside these products (mortgages, credit card receivables, etc.) suffer losses. The potential size of such losses is currently concerning financial markets, and the paper looks at various ways to quantify the issues and where, going forward, pressures are most likely to arise. The problem is seen mainly as a stock adjustment issue (related to inventories of assets etc.) that is going to require time to set right. Time could well be more important than the cost of capital. The idea of a super fund to buy up unwanted assets should be seen in this context. The paper goes on to look at financial market implications, including the credit supply process, spreads, and the dollar.
Cyclical fluctuations in economic activity have moderated over time but the extent and dynamics of volatility remain different across OECD countries. A reason behind this heterogeneity is that countries exhibit different degrees of resilience in the face of common shocks. This paper traces divergences in resilience back to different policy settings and institutions in labour, product and financial markets. Using pooled regression analysis across 20 OECD countries over the period 1982-2003, the paper identifies the impact of policy settings on two dimensions of resilience: the impact effect of a shock and its subsequent persistence. Policies and institutions associated with rigidities in labour and product markets are found to dampen the initial impact of shocks but to make their effects more persistent, while policies allowing for deep mortgage markets lower persistence and thereby improve resilience. Combining these two dimensions of resilience, the paper then uses the estimated equations to derive indicators of resilience for the OECD countries concerned, based on their current or recent policy settings. Three groups of countries emerge. In English-speaking countries, simulations suggest shocks have a significant initial effect on activity but this impact then dies out relatively quickly. By contrast, in many continental European countries the initial impact of shocks is cushioned but their effect linger for longer, with the cumulated output loss tending to be larger than in English-speaking countries. Finally a few, mostly small, European countries combine cushioning of the initial shock with a fairly quick return to baseline.
Since 2001, Chile’s fiscal policy has been built on the concept of a central government structural balance. The Fiscal Responsibility Law, approved in 2006, gave legal force to key aspects of the structural surplus and fiscal policy. This article assesses the results of the structural surplus rule in Chile over the past six years.
The emergence of a “second wave” of developing-country multinational enterprises (MNEs) in a variety of industries is one of the characterizing features of globalisation. These new MNEs did not delay their internationalisation until they were large, as did most of their predecessors, and often become global as a result of direct firm-to-firm contracting. Many grow large as they internationalise; conversely, they internationalise in order to grow large. This is a striking pattern which, if confirmed, indicates that enterprises from developing countries have pursued distinctive approaches to internationalisation. It is a further interesting hypothesis to investigate to what extent such firms, born as suppliers of established incumbents, have leveraged on their “latecomer” status to accelerate their internationalisation. This paper documents how emerging MNEs may follow quite different patterns to reach, or at least approach, global competitiveness. In particular, it investigates how three latecomer MNEs pursued global growth through accelerated internationalisation combined with strategic and organisational innovation. Haier (China), Mabe (Mexico) and Arçelik (Turkey) emerged as Dragon Multinationals in the large home appliances (so-called “white goods”) industry
This paper examines the potential role of innovation policy in enhancing long-term productivity growth in Russia. It begins by exploring the role of framework conditions for business in encouraging innovative activities, particularly with respect to intellectual property rights and competition. Realising Russia’s innovation potential will also require reform of the large public science sector. This raises issues pertaining to the organisation and financing of public research bodies and, in particular, to the incentives and opportunities they face in commercialising the results of their research. Finally, the paper looks at the potential role of direct interventions, such as special economic zones and technoparks, as well as the scope for improving the tax regime for private-sector R&D.
Several studies have analysed the characteristics of the knowledge society, as well as its impact on the production of "official" statistics. In this paper we will not enter into this debate, but we will try to analyse the role of statistics in building a knowledge society and improving the democratic control of policy makers. This issue is especially important because the development of information and communication technologies (ICT) dramatically reduced the cost of producing statistics: therefore, nowadays a huge number of organisations is able to produce statistical figures and indices, frequently picked up by media, just for advocacy purposes and this contributes to create a sense of "confusion" often reported by citizens about the real state of the economy and of the society. This "noise" does not help at all citizens to make the best possible choices, including the electoral ones, and this is not a good thing for the functioning of economic markets and the democracy. The paper initially analyses the relationships between information, expectations and economic theory, as well as the nexus between information and political sciences. In the second part, various approaches to the measurement of societal progress and the role of "key indicators" are presented and analysed. Moreover, theoretical models and empirical evidence about what citizens know on societal progress are discussed. Finally, the OECD project on the measurement of societal progress is presented.
While some South African schools have excellent infrastructure, others lack basic services such as water and sanitation. The school infrastructure performance indicator system (SIPIS) project offers an approach that can address both the urgent provision of basic services as well as support the development of more sophisticated and more effective education environments over time.
In this paper, we test whether the growth experience of a sample of OECD countries over the past three decades is more consistent with the human-capital augmented Solow model of exogenous growth, or with an endogenous growth model à la Uzawa-Lucas with constant returns to scale to “broad” (human and physical) capital. We exploit the different non-linear restrictions implied by these two models to discriminate between them. Using pooled crosscountry time-series data, we specify our growth regression by imposing cross-country homogeneity restrictions only on long-run coefficients, while letting the speed of convergence and short term dynamics to vary across countries. While there are indeed good reasons to believe in common long-run coefficients, given that OECD countries have access to common technologies and have intensive intra-industry trade and foreign direct investment, the theoretical models imply that the speed of convergence to the steady state differs across countries because of cross-country heterogeneity in population growth, technical change and progressiveness of the income tax. Therefore, standard dynamic fixed effect specifications, by imposing cross-country homogeneity restrictions on speed of convergence and short-run parameters, suffer from a heterogeneity bias and are not suited to implement our tests. The results suggest a strong effect of human capital accumulation: the estimated long-run effect on output of one additional year of education (about 6-9%) is also within the range of the estimates obtained in microeconomic analyses of the private returns to schooling. Our estimated speed of convergence is too fast to be compatible with the augmented Solow model, while is consistent with the Uzawa-Lucas model with constant returns to scale. This main finding is robust to several robustness tests.
This study, part of OECD/CERI's project on Measuring the Social Outcomes of Learning, investigates the relationship between educational attainment and political participation in Austria. First, a model based on various theoretical considerations is introduced. This incorporates direct educational effects as well as indirect effects that occur through material resources, social capital, civic orientations and values. Using a multivariate analytical approach the model is applied to the 2002 European Social Survey. Three forms of political participation are distinguished, namely voting, elite-directed and elite-challenging activities. Educational attainment is found to have significant effects on all three types but the strongest impact is on elite-challenging activities. The latter includes forms of political action such as signing petitions and buying or boycotting certain products which are increasingly accepted as a legitimate way to express one's political preferences. Most of the effects of education arise through intermediate variables, including social capital (especially affiliation with non-political organisations), civic orientations (political interest as well as internal and external efficacy) and individual (postmaterialist) values. The effect of education on elite-directed activity operated primarily through organisational affiliation, as well as internal and external efficacy. In contrast, the effect of education on elite-challenging activity seems to be fostered via social environments that combine high levels of political interest, interpersonal trust, postmaterialist values and a certain degree of scepticism against political institutions. The paper concludes with suggestions for policy and research.
This paper argues that regulatory measures affect the fixed cost of entering a market as well as the variable costs of servicing that market. Moreover, differences in regulation among countries often imply that firms have to incur entry costs in every new market. Indicators of regulatory intensity and heterogeneity are introduced in a gravity model and their impact on market entry and subsequent trade flows estimated for total services, business services and financial services. It is found that regulatory heterogeneity has a relatively large negative impact on both market entry and subsequent trade flows. Further, regulatory barriers have a negative effect on the local services sectors’ export performance. Finally it is found that regulations that aims at correcting market failure can have a positive impact on trade. It is concluded that services trade liberalization and regulatory reforms are complementary in creating competitive services markets.
This study analyses the role that services trade liberalisation could play in fostering tourism growth in developing countries. The economic and social importance of tourism means that the industry is high on the list of development priorities in many developing countries and LDCs. In order to have a successful tourism export industry, effective linkages need to be established with many different sectors, most of which are other services. Trade and investment liberalisation at the national, regional and multilateral levels can be a means to complement national efforts to attain these goals. Sustainable tourism development, though, requires strong public sector management and support. Due consideration needs to be given to develop effective regulation, including competition policy and institutions, to avoid exceeding the carrying capacity of assets, and to strengthen national capacity in order to minimise financial leakages.