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OECD Business and Finance Outlook 2016

image of OECD Business and Finance Outlook 2016

It is seven years since the global crisis and despite easy monetary policy, financial regulatory reform, and G20 resolutions favouring structural measures, the world economy is not making a lot of progress. Indeed, the responses to the crisis seem mainly to have stopped the banks from failing and then pushed the many faces of the crisis around between regions—currently taking the form of excess capacity in emerging markets. Productivity growth raises income per head, allows companies to pay better wages and it raises demand to help to eliminate excess capacity and improve employment. However, this element is missing in the global corporate sector. The theme of this year’s Business and Finance Outlook is fragmentation: the inconsistent structures, policies, rules, laws and industry practices that appear to be blocking business efficiency and productivity growth.

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Is foreign bribery an attractive investment in some countries?

One of the most basic legal principles is that crime should not pay. Yet this chapter will show that, in many jurisdictions with weak sanctions, foreign bribery may be an attractive investment. In others, foreign bribery is subject to strong penalties, although some of these penalties exist only on paper because they are not backed up by effective enforcement. Only a few countries combine strong sanctions with active enforcement of anti-bribery laws. Thus, this chapter paints a picture of fragmented deterrence across the 41 Parties to the Anti-Bribery Convention. This patchwork of incentives and disincentives for foreign bribery is explored using simulations of “net present value” for “investments in foreign bribery” under assumptions of both certainty and uncertainty. The simulations draw on sanctions data produced by the OECD Working Group on Bribery for each of the 41 Parties to the Anti-Bribery Convention and on the cash flows – including both bribes and benefits – associated with a real-world bribery scenario. They show, in particular, that in many countries having low fines for paying bribery, a company would still be willing to “invest” in a foreign bribery scheme even if it knew in advance that it would be caught and fined at the end of the bribery scenario. This implies that fines for bribery are set too low in many jurisdictions.

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