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Consolidated foreign wealth of nations: Nationality-based measures of international exposure
This study presents novel estimates of foreign holdings using a consolidated-by- nationality approach for a sample of 14 developed countries over multiple years. This approach provides an alternative for policymakers and researchers to analyse international exposure that complements the existing approach based on residence-based data. Two main advantages of the nationality-based approach are that it looks through corporate structures of multinational enterprises and considers local positions. The resulting novel data show that aggregate international financial integration is larger than residence-based data indicate for the sample. These data are used to analyse (i) profit-shifting activities and (ii) spillovers from United States monetary policy shocks. This study presents evidence suggesting that nationals of relatively high-tax countries may shift assets to low-tax countries in ways not fully captured in residence-based statistics. It also shows that a tightening in United States monetary policy is associated with a decline in foreign asset holdings by non-financial multinational enterprises using the consolidated-by-nationality approach. These findings underscore the relevance of using the consolidated-by-nationality approach to evaluate policy-relevant questions.
Editorial statement
Transnational Corporations is a longstanding policy-oriented refereed research journal on issues related to investment multinational enterprises and development. It is an official journal of the United Nations managed by the United Nations Conference on Trade and Development (UNCTAD). As such it has global reach a strong development policy imprint and high potential for impact beyond the scholarly community. There are no fees or article processing charges associated with submitting to or publishing in Transnational Corporations. All articles of the online version of the journal are open access and free to read and download for everyone.
Arguments for implementing formulary apportionment in the European Union
Using recently published country-by-country reporting data released by the United States Internal Revenue Service we assess United States multinationals’ activity in the single market aiming to contribute with databased evidence to the ongoing political debate about the potential changes in the European corporate tax system. Our findings show evidence of artificial profit shifting across member States under the current method to allocate profits of multinational enterprises with the Netherlands Luxembourg and Ireland appearing to be the countries showing a higher degree of complicity with these activities. Such actions challenge fair international taxation in the European Union distorting European internal competition and hampering tax revenue collection. Although it may not be (yet) the time for a worldwide unitary taxation approach the analysis highlights the urgency for the European Union to adopt a formulary apportionment approach overhauling a century-old set of global tax rules based on the separate entity approach.
Do minority shareholder protection laws benefit investors? Evidence from a natural experiment on cross-listed firms
Good corporate governance practices are not universal. Unlike practices in institutional settings in developed countries which have attracted most scholarly attention corporate governance practices in emerging economies lean towards addressing principal-principal conflicts that stem from concentrated ownership. The study employs a difference-in-differences panel data design with matched samples of Chinese firms cross-listed in mainland China and Hong Kong (China) and of those listed only in Hong Kong (China) based on propensity score matching. It thus adopts a natural experimental setting – the promulgation of China’s Revised Securities Law in March 2020 – to pinpoint whether and how legal revisions of investor protection laws can really benefit investors. The findings show that independent directors in cross-listed firms turn over significantly more than those in firms listed only in Hong Kong (China). Also it suggests that firms mainly replace departed directors with new directors from similar demographics. Furthermore the study observes no evidence of significant changes in board independence in the short run. The findings suggest that policymakers should mind unintended consequences beyond the intended outcomes of the legal reforms on corporate governance particularly the potential disproportionate impacts on smaller firms.
Bridging the productivity gap: A comparative analysis of foreign-owned and domestic firms in Viet Nam
This study investigates the productivity gap between foreign-owned and domestic firms in Viet Nam. Using quantile regression estimation for the period of 2011–2020 the study first examines the impact of firms’ specifics and of provincial governance quality on firms’ total factor productivity at different points of the productivity distribution. The results show that labour productivity market share and return on assets appear to significantly affect firm productivity regardless of firm groups or quantiles. To understand the productivity gap between foreign and domestic firms the study uses the quantile decomposition approach to differentiate the factors that contribute to the gap at different quantiles. Our findings reveal that across quantiles most of the productivity gap is explained by firms’ specifics especially labour productivity. To address the productivity gap between foreign-owned and domestic firms in Viet Nam policymakers should focus on enhancing domestic firms’ access to technology firms’ experience and human capital development as firm-specific factors appear to be major contributors to the productivity differential. In addition improving provincial governance quality and creating an enabling environment for both foreign-owned and domestic firms can further stimulate productivity growth and foster healthy competition in the manufacturing sector.
Special economic zones and entrepreneurship: A new path forward for SEZs in Africa?
In recent years interest has been growing among policymakers in how to leverage special economic zone (SEZ) policies to support local entrepreneurship. With a few recent exceptions the academic literature to date has been silent on the matter. This article aims to contribute to addressing this gap. First it develops a conceptual framework linking SEZ policies and entrepreneurship development. Second it explores the state of play of entrepreneurship promotion in SEZs in Africa using a survey of African SEZs and two case studies. We find significant appetite among African SEZs to promote local entrepreneurship; however it is less clear how best to accomplish the task. Many of the policies facilities and services offered are open to local entrepreneurs rather than being tailored specifically to their needs. The support required in some policy areas also seems to be more straightforward than in others. Adapting the SEZ offering to the needs of local entrepreneurs is one of the key challenges to increasing the effectiveness of the support.
Science Technology and Innovation Policy Review: Seychelles
The Science Technology and Innovation (STI) Policy Review of Seychelles was conducted by the United Nations Conference on Trade and Development (UNCTAD) at the request of the Government of Seychelles. The request was made in the context of the UNCTAD project on Technology Assessment in the energy and agricultural sectors in Africa to accelerate progress on science technology and innovation and this Review is one of its products. The review of Seychelles' National Innovation System (NIS) and the implementation of its 2016-2025 national Science Technology and Innovation Policy and Strategy (STIPS) suggests a range of policy actions and institutional reforms. These recommendations are essential for invigorating the NIS thereby enabling Seychelles to harness STI and entrepreneurship effectively to achieve the goals set in Vision 2033 and the Sustainable Development Goals (SDGs). This report reviews the implementation of the 2016-2025 STI Policy and Strategy (STIPS) and assess the country’s national innovation system.
Implementation and effectiveness of the current STI policy frameworks
Seychelles Vision 2033 and the NDS 2019-2023 contain explicit provisions for promoting STI. The 2016-2025 Science Technology and Innovation Policy and Strategy (STIPS) is well aligned with the Vision 2033 and the NDS. Mainstreaming STI across all sectors of the economy is key to realizing Vision 2033. In addition the Seychelles has an array of national policies which while not strictly in the mandate of the MIEI and DSTI can positively contribute to STI outcomes. These include policies for FDI intellectual property protection trade industrialization environmental conservation and climate change education and training public procurement ICT technology biosafety and the blue economy. Illustrative cases or examples are given to demonstrate that for successful implementation of STIPS 2016-2025 there is a need for policy coherence and alignment across policy sectors and the use of policy mixes. STIPS should not be treated as a stand-alone policy regime but as a framework for mainstreaming STI across all sectors of the economy.
Innovation in economic sectors for structural transformation
Seychelle’s growth has been fuelled largely by developments in services particularly tourism and related sectors. While Seychelles can benefit from economic diversification opportunities during periods of growth are lost. Structural transformation processes usually characteristic of innovation-led growth have stalled in Seychelles since 2005. A key indicator of dynamic and active development is the presence of structural transformation processes. In Seychelles these have been modest since 2004. Structural transformation can be defined as the movement of labour and other productive resources from economic activities of low-productivity to high-productivity (UNCTAD 2016). Alternatively structural transformation may be seen as the reallocation of economic activity expressed as their share in GDP across three broad sectors: agriculture industry and services (Herrendorf et al. 2013).
Seychelles development trajectory and sustainable development challenge
Seychelles is a high-income Small Island Developing State (SIDS) in the western Indian Ocean that has a small and culturally diverse population and ecologically diverse environment. It is a high-income economy with a per capita income at $14340 GNI according to the Atlas method (current US dollars). Based on a purchasing power parity indicator (PPP) in current international dollars however the GNI per capita rises to $33480 in 2022. With regards to its Human Development Index (HDI) in 2021 it was ranked 72nd out of 189 countries (UNDP 2021/2022).
Forging international STI partnerships for sustainable development
To realize its aspirations espoused in Vision 2033 and NDS 2019 -2023 Seychelles will need to strategically invest in building STI partnerships at all levels. Partnerships in STI can take different forms including public-private bilateral regional multilateral continental as well as with international organizations and development partners.
Seychelles’ framework conditions for innovation
Framework conditions for innovation shape and influence the innovation ecosystem in a country. They do so by enabling individuals businesses and organizations to innovate. Certain conditions and policy efforts can encourage and support innovation fostering economic growth competitiveness and societal progress. Other key elements of framework conditions for innovation include regulations and standards funding and infrastructure for research and development digital and logistics infrastructures an actively managed innovation ecosystem a skilled and educated workforce trade openness a positive entrepreneurial culture and risk-taking attitudes and active international collaborations in STI among others. Finally policymakers must embrace a sciencebased approach to sustainable development challenges as an unavoidable framework condition for innovation.
Acknowledgements
This Science Technology and Innovation Policy Review (STIP Review) of Seychelles was undertaken by the Technology Innovation and Knowledge Development Branch of the Division on Technology and Logistics of UNCTAD under the guidance of Angel Gonzalez-Sanz Head of the Branch and the direct supervision of Liping Zhang Chief of the Science Technology and Innovation for Development Section who also leads the UNCTAD Project on Technology Assessment in the Energy and Agricultural Sectors in Africa to Accelerate Progress on Science Technology and Innovation.