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Ireland

Can Tax Reforms Help Create Jobs?

Sebastian Eckardt's picture

Europe faces a significant job challenge. At an average of 11 percent, unemployment remains stubbornly high while labor force participation, at 58 percent of the working age population, lags behind most other regions of the world. This means, that only every second person in working age currently has a paying job across the region. Addressing the job challenge requires multifaceted labor market policies. We argue however that reducing the tax burden on labor, which remains high across the region, holds the promise of improving labor market outcomes. Such tax cuts could especially target low-wage workers, which often face the highest marginal tax rates and very elastic labor demand and are therefore most likely to be priced out of the formal labor market.

Prospects Daily: Euro Area services PMI rises; Brazil’s industrial production slows; Philippines’ 2012 inflation improved

Financial Markets…The Standard & Poor’s 500 Index added 0.1% in Friday morning trade and the dollar weakened 0.2% versus the euro after a U.S. Labor Department report showed a slightly slower than expected employment growth in December. The S&P500 has advanced 4.1% this week, gearing for its largest weekly gain in 13 months.

New Pledges Expand GAFSP's Food Security Work in World's Poorest Countries

Rachel Kyte's picture

When you want to put money, ideas, innovation, and hard work together to increase food security, there’s nowhere better than the Global Agriculture and Food Security Program – GAFSP.

Don’t just believe me. Listen to the Rwandan farmers whose now-terraced hillsides are getting higher yields, producing better nutrition, and improving their livelihoods.

Similar stories can be told in Tajikistan, Sierra Leone, Bangladesh, and elsewhere.

Japan and the Republic of Korea are among those convinced that GAFSP is a good investment in food security. Inspired by a challenge from the Unites States, Japan and South Korea just pledged an additional $60 million to GAFSP at a meeting in Tokyo held in conjunction with the World Bank and IMF Annual Meetings.

The United States announced that it was prepared to contribute an additional $1 to GAFSP for every $2 contributed by other donors, up to a total of $475 million.

Why is GAFSP so successful?

Of One Mind? Closer Coordination of Monetary Policy and Financial Regulation

The Central Bank in Dublin: A responsible conversation needs to be reignited between prudential regulators and monetary policy authorities. (Credit: Infomatique, Flickr Creative Commons)

Recent debate over the optimal form of regulatory architecture for increasingly integrated and interconnected financial systems has largely focused on redefining the balance between regulators and the universe of financial institutions they regulate. This piece identifies a less “fashionable” – though no less significant – contributor to the global financial crisis, that is, the dysfunctional relationship which often existed between financial regulators and monetary policy authorities. The fact that this dysfunction has not been discussed in depth suggests that its negative consequences are no less likely to re-emerge in the future.

Learning from Dublin: Urban Cultural Heritage as Differentiator

Rana Amirtahmasebi's picture

IFSC Dublin, IrelandA few weeks ago, John O’Brien, the chief strategist for Ireland’s Industrial Development Agency, was at The World Bank, Washington DC to address an event on the role of cultural heritage and historic cities in Local Economic Development. The theme of the event was creating jobs by supporting historic cities and cultural heritage. Urban Sector Manager Abha Joshi-Ghani began the day’s session by underlining the significance of cultural heritage in city development: “We have started to look at cities as drivers of entrepreneurship and innovation.  It is important to understand how cities attract skilled people and industries to create jobs and what role they play in economic growth. Therefore it is very helpful to find linkages between cultural heritage assets and job creation.”

FDI in Ireland: A Reason for Optimism?

John Anderson's picture

On a recent trip to Ireland, stories about the impact of the continuing economic crisis were abundant. Newspapers ran stories about the substantial loss of wealth and purchasing power, such as the increase in 'negative equity' as the value of homes owned by the middle class fell significantly below their mortgages. Cab drivers explained how jobs had been shed throughout the economy, and bemoaned the resulting rise in the number of drivers and increased competition for fares. The reality of the recession and fiscal collapse following the banking crisis of late 2008 was clear.

However, anecdotal evidence about a different aspect of Irish finance – foreign direct investment – suggested a more positive story. I walked through one neighborhood in Dublin that houses the European headquarters of Google, Facebook, and LinkedIn. The latter two were established after the onset of the economic crisis, and Google is in the process of expanding its presence in Dublin. Lawyers at large corporate law firms were excited to discuss FDI, citing it as a key driver of Ireland’s future growth. One firm even maintains a FDI index that highlights large inflows and the positive perception of Ireland as a destination for US investment.

Might FDI in Ireland be the best indicator to consider the strength of the economic fundamentals that enable long-term growth? Ireland has historically benefitted from large inflows of FDI relative to its size. And despite the recent economic crisis, these inflows have largely continued.

Over the past 10 years, inflows of FDI into Ireland tend to be substantially higher as a percentage of GDP than inflows into other OECD economies (see Figure 1). In 2009 and 2010, the two years immediately following the banking collapse, Ireland attracted three to four times more FDI proportionately than other OECD economies. These inflows were not just large in relative terms – they were equivalent to 11.7% of GDP in 2009 and 12.9% in 2010. The negative inflows in 2005 and 2008 do indicate that more money was disinvested out of Ireland than newly invested in the economy those years. However, such outflows are mostly loans or dividend payments from foreign-owned firms in Ireland to their affiliates abroad, at least some of which were likely caused by a 2004 change in the US tax rate on foreign profits.

Figure 1: Net inflows of FDI as percentage of GDP, Ireland vs OECD
 
Source: UNCTAD and author’s calculations

Prospects Blog: The euro area crisis: are the spreading market tensions justified?

Old problems, wider tensions? In a momentous two weeks that saw two of the euro area (EA) countries under joint EU/IMF programs have their sovereign debt downgraded to “junk” status, market tensions widened to include two larger economies that together represent almost thirty percent of the whole EA GDP. Is this behavior by the markets truly justified?

How Advanced Economies Can Tackle Their Debt Woes

Vamsee Kanchi's picture

Given the urgent need for policymakers in Europe and other advanced economies to tackle current debt challenges, there is a frantic scramble for suitable policy tools that will help resolve the Greek conundrum. 

One policy tool – a form of debt restructuring known as ‘financial repression’ that focuses on establishing a tighter relationship between government and the financial industry by setting caps on interest rates and regulating cross-border money flows – has largely been overlooked.  The Petersen Insitute’s Carmen Reinhart recently delivered a

From Bubble to Bubble: Government Policy Blunders

Raj Nallari's picture

Greedy speculators in housing and private bankers, financial innovation and failure of risk models, regulators and credit rating agencies were all deservedly blamed for the recent financial crisis. Behind this all is public policy that worsened the problems.


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