Global governance

Stephen P. Ferris, Jan Hanousek, Jiri Tresl, 30 April 2020

Corporation corruption is an issue that remains at the forefront of regulatory policy. This column examines the persistence of corruption among a sample of privately held firms from 12 Central and Eastern European countries. Creating a proxy for corporate corruption based on a firm’s internal inefficiency, it is suggested that corruption can enhance a firm’s overall profitability. A channel analysis reveals that inflating staff costs is the most common approach by which firms divert funds to finance corruption. Corruption may persist simply because of its ability to improve a firm’s return on assets.

Thomas Tørsløv, Ludvig Wier, Gabriel Zucman, 21 April 2020

Despite the legal frameworks and large amounts of lost tax revenue, profit-shifting practices persist around the world. This column argues that fiscal authorities of high-tax countries face an incentive problem in combatting profit shifting to tax havens. Enforcement efforts are focused on relocating profits booked in other high-tax countries rather than those in tax havens. This can ultimately result in lower global tax payments of multinational companies. The results call for a global corporate tax reform in order to save resources that currently go to wasteful and inconsequential tax enforcement.

Susan Ariel Aaronson, 05 February 2020

Individuals, citizens and firms have become increasingly dependent on data-driven services such as artificial intelligence and apps, and the same is true of defence and national security officials. This column argues that the US failure to adequately govern how firms use and monetise data affects national security in many ways. It also examines specific examples of the misuse of data and assesses the responses by the US and the EU.

Fukunari Kimura, 07 January 2020

While national governments are already implementing various economic policies related to data flows in the real world, there is not yet a consensus on how economists should approach the topic. This column outlines a framework recently proposed by the T20 Task Force on Trade, Investment, and Globalization that classifies data flow policy into five categories and allows the appropriateness of policy from the viewpoint of economics to be discussed. As a result, it becomes possible to achieve policy harmonisation in some areas and to identify others where harmonisation cannot easily be achieved.

Basak Bayramoglu, Brian Copeland, Marco Fugazza, Jean-François Jacques, 21 October 2019

With fisheries resources dwindling drastically, countries are scrambling to negotiate a deal to reduce subsidies and ensure sustainable management. This column suggests that reaching a deal on fisheries subsidies may be difficult. For many resources, international spillover effects create incentives to negotiate reductions in subsidies, since one country’s subsidy worsens other exporters’ terms of trade. However, the renewable nature of fisheries arguably limits these incentives, and a comprehensive approach to negotiations including quotas and subsidies is desirable to support both fishing communities and environmental sustainability.

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