RSS feeds from globalization research centers

How Trash-talking Affects Performance

Trash-talking is fairly commonplace, whether in sports, business or elsewhere. But how does it affect the targets of these insults? Wharton research has some surprising findings.

Why We Need to Kick Incivility Out of the Office

Disrespect and nastiness are worse problems at work than they used to be, and they’re making our days harder. Author Christine Porath has been looking for solutions.

Why Leaders Must Balance Ego with Humility

Raj Gupta, former CEO of specialty chemicals firm Rohm and Haas, shares insights from his professional and personal journey.

Suzanne Hall to chair discussion on social cohesion at the Royal Institute of British Architects

RSS Source: Urban Age - June 30, 2017 - 7:11am

Cities Programme Director Suzanne Hall will chair a discussion on architecture and social cohesion at the Royal Institute of British Architects (RIBA) on Tuesday. The contribution is part of the RIBA International Week taking place from 3 to 7 July 2017, with a programme of events and keynote speeches around the theme of the New Urban Agenda – the United Nation’s global strategy on goals for sustainable development and housing over the coming two decades.

Making Statistics Work in the Real World

Recent Wharton research examines the interplay between the computational complexity of statistical methods and their performance.

What Leaders Gain by Listening Closely to Employees

Bill Sandbrook, CEO of U.S. Concrete, explains what he has learned about leadership throughout his career.

Fixing the Fed: How to Reform America’s Central Bank

For many Americans, how the Federal Reserve operates is a mystery. A new book by former Fed analyst Danielle DiMartino Booth offers an insider's view.

New working paper on urban planning and humanitarian crises co-authored by David Garcia

RSS Source: Urban Age - June 29, 2017 - 6:58am

Urban Age Research Assistant David Garcia has recently contributed to the publication of the working paper, Urban planning following humanitarian crises: Supporting local government to take the lead in the Philippines following super typhoon Haiyan. The paper, co-authored with Elizabeth Parker, Victoria Maynard, and Rahayu Yoseph-​Paulus in a series published by the IIED human settlements research group aims to identify, document and disseminate learning from UN–Habitat’s experience providing urban planning support to three Local Government Units in Guiuan, Ormoc and Tacloban after super typhoon Haiyan in the Philippines.

How Investor Learning Affects Firm Behavior

Recent Wharton research illustrates the need for managers to understand where investor beliefs are when disclosing information.

The Huge Hole in the Standard Economic Model

Standard economic models ignore important things like health and well-being. A better model would take the shape of a doughnut, says author Kate Raworth.

What Insights Lie at the Intersection of Neuroscience and Marketing?

Businesses could better deconstruct how people make decisions -- and potentially tweak the triggers, say experts at the Wharton Neuroscience Initiative.

Influencing the Influencers: Using Social Media to Find Top Customers

Recent Wharton research proposes an analytics model to help businesses identify their high-value customers.

How Anticipating Future Variety Curbs Consumer Boredom

Wharton research shows that when consumers are offered more variety for future consumption, their perception of present satisfaction changes.

Philipp Rode to moderate Mobilize Santiago plenary

RSS Source: Urban Age - June 27, 2017 - 8:01am

LSE Cities’ Executive Director Philipp Rode will moderate “Governing Urban Accessibility Beyond Transport” at Mobilize Santiago, the annual sustainable transport summit of the Institute for Transportation and Development Policy (ITDP). Thursday’s plenary – “Governing Urban Accessibility Beyond Transport” – will consider access as the basis of economic development in cities. Research shows that governing urban accessibility requires moving beyond conventional urban transport considerations to a greater recognition of land use, urban design, service levels and travel speeds, while ensuring greater coordination between municipal and metropolitan agencies.

China Is the De Facto Leader of Globalization

RSS Source: YaleGlobal - January 12, 2017 - 11:53am
Xi Jinping is ready to lead policies on shaping globalization and fighting climate change

We Can’t Undo Globalization, But Can Improve It

RSS Source: YaleGlobal - January 10, 2017 - 2:28pm
Job hunters should relocate, and companies could expand export capability

Globalization Has Done a Lot of Great Things for Americans

RSS Source: YaleGlobal - January 4, 2017 - 12:52pm
Benefits include innovation and low prices

How to Cure the Globalization Backlash

RSS Source: YaleGlobal - December 22, 2016 - 11:15am
The developed world has lost its confidence

Development blog: Call for Papers: 8th International Conference on Migration and Development

I’m delighted to be helping organize again, for 2015, the world’s premier research conference on the economics of migration and development. Full-paper submissions are due January 20, at migdevconference@cgdev.org.

I’ve gushed before about the uncommon rigor and innovation in the papers at this highly selective conference, year after year. The people who come are simply the best in the field. The conference is part of a historic shift in how development researchers think about migration and vice versa. Human mobility shapes, and is shaped by, the development process in ways that scholars are only beginning to understand.

This year we’ll have keynote speeches from two stars, Dani Rodrik of the Institute for Advanced Study and Ran Abramitzky from Stanford University. The papers selected for presentation will be considered for a special issue of the World Bank Economic Review.  As in previous years, the heavy lifting is being done by our collaborators at the Paris School of Economics, the Agence Française de Développement, and the World Bank—to all of whom we’re very grateful.

Click below to enlarge the full conference announcement:

Authors: Michael Clemens View Profile

Development blog: Four Futures for International Tax Rules

Consensus on the reform of international tax rules may be splintering under the combined pressures of post-crisis austerity and revelations about cut-throat tax ‘competition’ (see my discussion on this here). In light of this, I sketch out four possible directions for international rules and one major trend common to all, and then assess the likely implications for developing countries.

1. Staying the BEPS course

The Base Erosion and Profit Shifting initiative (BEPS), led by the OECD at the behest of the G-8 and G-20 countries, aims to create better alignment between multinational profits and the location of their actual economic activity. The OECD’s remit, set out in a detailed action plan, is to deliver progress in a set of largely discrete areas to make the current system function better.

The BEPS approach rests on a commitment to “arm’s length pricing” (ALP) for transactions among members of the same multinational group, which is intended to give rise in turn to the real (market-equivalent) distribution of profit across the group. Setting aside whether this is an economically sensible way of looking at a group of related parties with common control, the approach simply may not be consistent with the aim – there is no evidence to suggest that ALP, if effective, would necessarily align profit with economic activity.

The UK’s proposed ‘diverted profits tax’ embodies the challenge for BEPS. Despite playing an important role in bringing BEPS into being, the UK government’s frustration with the inability of ALP to deliver politically acceptable taxation of major multinationals has led it to take a quite different tack: in effect, to require explicitly some degree of alignment of profits and activity (sales).

Will leading states maintain their commitment to the OECD approach? The answer may depend on a return to stronger economic performance, and the easing of broader fiscal pressure. Continuing anaemic growth may lead to continuing political pressure and proliferation of work-around measures like the Google tax that cut across the ALP by requiring some alignment of profits and activity. 

2. A bigger fix for BEPS

A more consensual future for BEPS can also be envisaged (hat tip to a necessarily anonymous official at a major ministry of finance), involving a rather broader fix but maintaining the fundamental nature of the current system.

This would involve countries signing up to three basic principles, which it has been suggested could eliminate 90 percent of the BEPS problem in one stroke:

  • A common tax base (so there is no incentive for arbitrage on the base)
  • Minimum tax rates (limiting, though not eliminating, the incentive for arbitrage on rates)
  • Elimination of preferential regimes (such as the patent box)

This would require a substantial shift in perceptions of the problem. Since some policymakers see this type of harmonization as a threat to sovereignty, progress seems likely only if such a view is eclipsed by the perception of tax ‘competition’ as the greater threat.

3. Unitary tax revolution

The most dramatic change conceivable would involve broad agreement to adopt the major alternative to the ALP, which is unitary taxation with formulary apportionment. In other words, the new approach would take the multinational group as the unit for taxation purposes, rather than individual companies within it, and apply a formula based on the location of economic activity to apportion the group’s tax base between different jurisdictions, where each may apply whatever level of tax they choose.

Given this approach is explicitly designed to align profits with economic activity, progress towards the agreed aim of the BEPS initiative is highly likely, and would benefit lower-income countries. While pressure for lower rates might build over time, the increase in tax sovereignty – the ability to make policy changes that matter – would remain.

However, political opposition has hindered the prospect of a global agreement to rip up the rules and start afresh. EU attempts to move towards an apportionment basis under the Common Consolidated Corporate Tax Base project appear stalled, and major powers like the US (despite its largely positive experience using unitary taxation among its own states), and the vast bulk of the multinational and accounting sectors continue to oppose, rendering a revolution unlikely in the medium term at least. 

4. Unitary tax evolution

A more likely scenario is one where the current system evolves gradually towards something more consistent with unitary taxation (UT). There are two main, complementary channels through which this could occur.

First, continuing dissatisfaction with the ALP – and the sense that developing countries’ concerns are not well reflected in BEPS – may give rise to a breakaway. Developing countries will soon be able to examine country-by-country reporting from multinationals operating in their jurisdiction, which will highlight the misalignment between the shares of activity hosted and shares of profits declared.

A single developing country or a regional grouping could reach a tipping point and decide to switch unilaterally to taking as tax base some formulary apportionment of the global profit. The demonstration effect could be powerful and drive others to follow suit.

The second channel is even more gradual. It involves the ongoing growth in the diversity of methods allowed under OECD rules and the use of methods that include some profit attribution on the basis of activity, as distinct from any ALP or other pricing decision.

Between the two channels, the world seems likely – ceteris paribus – to move at least a little further in this direction over time. Again, this scenario would offer the possibility of greater tax sovereignty for many developing countries.

Development prospects and a common trend

Lower-income countries obtain, on average, much smaller shares of GDP in corporate tax revenue. In no small part this is due to a combination of limits to states’ technical capacity and negotiating power with large multinationals, and to the incentives that the international system provides for profit-shifting. As such, the four futures can be considered in terms of their likely impact on these two factors. 

Source (columns A and B): McNabb & LeMay-Boucher, 2014; data from ICTD Government Revenue Dataset.

The BEPS course (future 1) address specific weaknesses in the rules, which may reduce profit-shifting incentives somewhat, but at a broader level will do little to diminish the complexity of rules that make technical capacity such a constraint. The ‘bigger fix’ (2) offers the possibility of greatly reduced incentives for multinationals, and so could have an appreciable benefit.

The unitary revolution (3) could change the power dynamic for lower-income countries entirely, both in relation to multinationals but also vis-à-vis higher-income countries – but partly for this reason is an implausible scenario. Evolutionary steps towards UT (4), however, seem likely, and have the potential to sharply reduce the importance of capacity constraints and to change the balance of negotiating power also.

In fact, the common trend in all four futures is in this direction. The presence of country-by-country reporting information, now established as OECD standard, provides a simple risk mechanism by allowing a check on the profit misalignment of each taxpayer. Any tax authority requiring this information from multinationals will be in a position, regardless of the range of possible outcomes under ALP (or directly under UT), to set effective limits on the extent of profit misalignment that they are willing to accept. This has the potential to change the relative negotiating power of even the least well-resourced tax authorities.

Publishing the data would provide a powerful accountability mechanism for both multinationals and tax authorities, in respect of each other and for civil society; but even held privately, this is information that can support substantial change. Not all transparency is equal; in this particular case, information is indeed power.

Authors: Alex Cobham View Profile
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