The rising threat of digital taxes across the world, most recently in New Zealand, is raising the stakes to reform the international corporate tax system. In February 2019, the OECD outlined four proposals that will go through public consultations in the coming months. Of those, the “user participation” proposal has popular appeal, but seems least likely to succeed.
Last week I spoke at the World Bank’s Productivity Bootcamp, organized by Ana Cusalito, Bill Maloney, and Jan De Loecker. A psychologist might say that the professor in me could not let go of teaching. But the Bootcamp was about more than “productivity.” It covered firm profitability, competition, and market power – topics that lie at the heart of the raging debate on market concentration and firm profits, the declining labor share in the U.S., and rising inequality.
When private sector firms provide skills for adults, most do so through on-the-job training (OJT). However, under what conditions can private sector firms provide more OJT? Investigating this question is critical to help governments leverage scarce domestic resources for public investments, and to support, vulnerable groups, while enabling the private sector to take on the bulk of adult skills training provision.
In 2014, foreign investors invested more than one trillion U.S. dollars into emerging countries. Of those inflows, 90 billion U.S. dollars came in the form of equity financing. On aggregate, capital inflows have helped may developing countries invest and grow, even despite the associated volatility they might entail. But we still do not know how those inflows are transmitted within an economy once they arrive.
Since the first industrial revolution, waves of technological improvement have changed the boundary of production and redefined the role of the state. The information and communication technology revolution has not only increased productivity, but has also reinterpreted the function of time and distance—billions of activities are now linked with “one-click,” and new transactions become possible with “just-in-time” delivery. If the technological revolution has made participation in Global Value Chains (GVCs) somewhat inevitable, it has also accentuated both the risks and opportunities associated with this involvement. On the one hand, participation in GVCs creates new opportunities for profits and expands the market horizon; but on the other hand, it exposes the enterprise sector to risks previously shielded by market boundaries and geographic distances, while increasing the scale of information asymmetry.