Archive

Archive for the ‘globalization’ Category

International Migration: The Relationship with Economic and Policy Factors in the Home and Destination Country

July 18, 2014 Comments off

International Migration: The Relationship with Economic and Policy Factors in the Home and Destination Country
Source: OECD

Unfavourable demographic trends in many OECD countries threaten the sustainability of potential labour resources, GDP growth and fiscal positions. One factor that is expected to mitigate these trends is continued inflows of migrant workers from low income economies. However, a rapid catch-up in productivity and wages in these traditional source countries vis-à-vis the OECD may weaken economic incentives for migration and imply a transition away from current migration patterns. This paper uses data of the high-skilled and low-skilled migrant stock between 92 origin and 44 destination countries to highlight the relationship between economic factors and migration. The paper also attempts to uncover links with policy and demographic factors prevailing in the origin and destination countries. The analysis suggests that higher skill-specific wages in the destination country are associated with more migration. This relationship appears to be particularly strong for migrants from middle-income countries, supporting theories of an inverted-U relationship between origin country economic development and the propensity to migrate. Policy differences between the destination and origin also appear important, for example in terms of regulations on businesses and labour markets, along with the relative quality of institutions. In some instances, the effects on high-skilled and low-skilled migrants differ markedly. Combining the estimated coefficients from the model with the skill-specific wage profile from the OECD long-term growth projections highlights the potential for weaker future migrant flows to OECD countries than implied by past trends and embedded in official projections.

About these ads

Corporate Inversions

July 17, 2014 Comments off

Corporate Inversions
Source: U.S. House of Representatives, Ways and Means Committee (Democrats)

Congress enacted Section 7874 of the Internal Revenue Code in 2004 as a way to discourage U.S. companies from acquiring smaller foreign companies and moving their tax home to a foreign jurisdiction as part of the overall transaction.

Under current law, a corporate inversion will not be respected for U.S. tax purposes if 80% or more of the new combined corporation (incorporated offshore) is owned by historic shareholders of the U.S. corporation (or, in the case of a partnership, interest owners of the partnership). Alternatively, if at least 60% (but less than 80%) of the combined foreign corporation is owned by historic shareholders of the U.S. corporation, the inversion itself will be respected but the expatriated entity will be subject to an “inversion gain,” including restrictions on the use of certain corporate attributes such as net operating losses. However, these unfavorable rules do not apply if the expanded affiliated group (“affiliated group”) that includes the combined corporation has “substantial business activities” (25% of employees by number, employees by compensation, assets, and income) in the foreign country where it is incorporated.

Since the provision was enacted in 2004, there have been almost 50 corporate inversions.

Global flows in a digital age

June 23, 2014 Comments off

Global flows in a digital age
Source: McKinsey & Company

Global flows have been a common thread in economic growth for centuries, since the days of the Silk Road, through the mercantilist and colonial periods and the Industrial Revolution. But today, the movement of goods, services, finance, and people has reached previously unimagined levels. Global flows are creating new degrees of connectedness among economies—and playing an ever-larger role in determining the fate of nations, companies, and individuals; to be unconnected is to fall behind.

Flows of goods, services, and finance reached $26 trillion in 2012, or 36 percent of global GDP, 1.5 times the level in 1990. Now, one in three goods crosses national borders, and more than one-third of financial investments are international transactions. In the next decade, global flows could triple, powered by rising prosperity and participation in the emerging world and by the spread of the Internet and digital technologies. Our scenarios show that global flows could reach $54 trillion to $85 trillion by 2025, more than double or triple their current scale.

A new McKinsey Global Institute (MGI) report, Global flows in a digital age: How trade, finance, people, and data connect the world economy, examines the inflows and outflows of goods, services, finance, and people, as well as the data and communication flows that underlie them all, for 195 countries around the world.

Do Resources Flow to Patenting Firms? Cross-Country Evidence from Firm Level Data

June 19, 2014 Comments off

Do Resources Flow to Patenting Firms? Cross-Country Evidence from Firm Level Data
Source: OECD

This paper exploits longitudinal data on firm performance and patenting activity for 23 OECD countries over the period 2003-2010 to explore the extent to which changes in the patent stock are associated with flows of capital and labour to patenting firms. While the finding that patenting is associated with real changes in economic activity at the firm level is in line with recent literature, new empirical evidence presented suggests that the impact of patenting on firm size is likely to be causal. Moreover, these data reveal important differences across OECD countries in the extent to which innovative firms can attract the complementary tangible resources that are required to implement and commercialise new ideas. In turn, the contribution of framework policies to explaining the observed cross-country differences in the magnitude of these flows is explored. While further research is required to establish causality, the results are consistent with the idea that well-functioning product, labour and capital markets; efficient judicial systems and bankruptcy laws that do not overly penalise failure can raise the returns to innovative activity. The paper also investigates the heterogeneous impacts of policies and finds that young firms – which are more likely to experiment with disruptive technologies and rely on external financing to implement and commercialise their ideas – disproportionately benefit from reforms to labour markets and more developed markets for credit and seed and early stage finance.

Innovation in Cancer Care and Implications for Health Systems: Global Oncology Trend Report

June 12, 2014 Comments off

Innovation in Cancer Care and Implications for Health Systems: Global Oncology Trend Report
Source: IMS Institute for Healthcare Informatics

The intensifying global focus on oncology reflects its increasing impact on patients and expanding share of healthcare expenditure. Relative to other parts of the healthcare system, oncology brings high levels of uncertainty—in terms of the nature and rate of innovative treatments, the willingness by payers to reimburse care at current levels, and the shifting composition of the cancer patient population from mature and developed markets to low- and middle-income countries. As the sales of cancer treatments rise to $100 billion annually, more intensive scrutiny of this market can be expected and a deeper understanding of global oncology trends will be required by all stakeholders.

The Transatlantic Economy 2014

May 30, 2014 Comments off

The Transatlantic Economy 2014
Source: Center for Transatlantic Relations

The United States and the European Union have launched negotiations towards a comprehensive economic agreement to open transatlantic markets. What will this mean for jobs, growth and innovation? How important are economic relations between the United States and Europe? The Transatlantic Economy 2014 annual survey offers the most up-to-date set of facts and figures describing the deep economic integration binding Europe and the United States. It documents European-sourced jobs, trade and investment in each of the 50 U.S. states, and U.S.-sourced jobs, trade and investment in each member state of the European Union and other European countries. It reviews key headline trends and helps readers understand the distinctive nature of transatlantic economic relations.

Key sectors of the transatlantic economy are integrating as never before. Europeans and Americans have become so intertwined that they are literally in each other’s business. These linkages underpin a multi-trillion dollar economy that generates millions of jobs on both sides of the Atlantic. The Transatlantic Economy 2014 offers a clear picture of the ‘deep integration’ forces shaping the U.S.-European economic relationship today; shows how these interdependencies have shifted in recent years; and explains how decision-makers can address the accompanying opportunities and challenges.

In the context of today’s debates about jobs, competitiveness, financial crisis, changing economic fortunes and rising powers, The Transatlantic Economy 2014 provides key insights about the United States and Europe in the global economy, with often counterintuitive connections with important implications for policymakers, business leaders, and local officials.

Global flows in a digital age

April 24, 2014 Comments off

Global flows in a digital age
Source: McKinsey & Company

Global flows have been a common thread in economic growth for centuries, since the days of the Silk Road, through the mercantilist and colonial periods and the Industrial Revolution. But today, the movement of goods, services, finance, and people has reached previously unimagined levels. Global flows are creating new degrees of connectedness among economies—and playing an ever-larger role in determining the fate of nations, companies, and individuals; to be unconnected is to fall behind.

Flows of goods, services, and finance reached $26 trillion in 2012, or 36 percent of global GDP, 1.5 times the level in 1990. Now, one in three goods crosses national borders, and more than one-third of financial investments are international transactions. In the next decade, global flows could triple, powered by rising prosperity and participation in the emerging world and by the spread of the Internet and digital technologies. Our scenarios show that global flows could reach $54 trillion to $85 trillion by 2025, more than double or triple their current scale.

Foreign Direct Investment (FDI) in the United States: Drivers of U.S. Economic Competitiveness

April 22, 2014 Comments off

Foreign Direct Investment (FDI) in the United States: Drivers of U.S. Economic Competitiveness
Source: U.S. Department of Commerce, International Trade Administration

This paper studies the impact of FDI on the U.S. economy, the strengths and attractiveness of the United States as a destination for FDI, and the competitiveness of the United States with respect to investment trends by geography and industry sector.

FDI is a key source of capital, job creation, innovation, and cross-border trade. In the United States, FDI has continued to flourish because firms worldwide recognize the United States as an innovative and stable market and the world’s largest economy. Moreover, the United States upholds its longstanding open investment policy, recognizing that the free movement of capital across borders is at the heart of today’s global economy.

Offshore Outsourcing of Administrative Functions by State Medicaid Agencies

April 18, 2014 Comments off

Offshore Outsourcing of Administrative Functions by State Medicaid Agencies
Source: U.S. Department of Health and Human Services, Office of Inspector General

WHY WE DID THIS STUDY
Outsourcing occurs when State Medicaid agencies enter into agreements with contractors to perform administrative functions. Outsourcing can occur inside the United States (domestic outsourcing) or outside (offshore outsourcing) and can be direct (when a Medicaid agency contracts with an offshore contractor) or indirect (when a Medicaid agency’s contractor subcontracts to an offshore contractor). There are no Federal regulations that prohibit the offshore outsourcing of Medicaid administrative functions. However, the Health Insurance Portability and Accountability Act (HIPAA) requires covered entities to have business associate agreements (BAAs) to protect personal health information (PHI).

HOW WE DID THIS STUDY
We conducted a survey of 56 Medicaid agencies, including those of the District of Columbia and the U.S. territories. We asked Medicaid agencies (1) whether they had any policies, Executive Orders, State laws, or contract requirements (collectively, “requirements”) addressing the outsourcing of administrative functions offshore and (2) whether they directly or indirectly outsourced administrative functions offshore. For Medicaid agencies with outsourcing requirements, we asked whether these requirements address PHI and whether the Medicaid agencies monitor contractors’ compliance with the requirements. We reviewed the Medicaid agencies’ requirements and BAAs. For the Medicaid agencies that outsource offshore, we asked what types of administrative functions are outsourced offshore.

WHAT WE FOUND
Only 15 of 56 Medicaid agencies have some form of State-specific requirement that addresses the outsourcing of administrative functions offshore. The remaining 41 Medicaid agencies reported no offshore outsourcing requirements and do not outsource administrative functions offshore. Among the 15 Medicaid agencies with requirements, 4 Medicaid agencies prohibit the outsourcing of administrative functions offshore and 11 Medicaid agencies allow it. The 11 Medicaid agencies that allow offshore outsourcing of administrative functions each maintain BAAs with contractors, which is a requirement under HIPAA. Among other things, BAAs are intended to safeguard PHI. These 11 Medicaid agencies do not have additional State requirements that specifically address safeguarding PHI. Seven of the eleven Medicaid agencies reported outsourcing offshore through subcontractors, but none reported sending PHI offshore. If Medicaid agencies engage in offshore outsourcing of administrative functions that involve PHI, it could present potential vulnerabilities. For example, Medicaid agencies or domestic contractors that send PHI offshore may have limited means of enforcing provisions of BAAs that are intended to safeguard PHI. Although some countries may have privacy protections greater than those in the United States, other countries may have limited or no privacy protections.

The Prudential Regulation of Financial Institutions: Why Regulatory Responses to the Crisis Might Not Prove Sufficient

April 2, 2014 Comments off

The Prudential Regulation of Financial Institutions: Why Regulatory Responses to the Crisis Might Not Prove Sufficient
Source: Organisation for Economic Co-operation and Development

It is now six years since a devastating financial and economic crisis rocked the global economy. Supported strongly by the G20 process, international regulators led by the Financial Stability Board have been working hard ever since to develop new regulatory standards designed to prevent a recurrence of these events. These international standards are intended to provide guidance for the drawing up of national legislation and regulation, and have already had a pervasive influence around the world. This paper surveys recent international developments concerning the prudential regulation of financial institutions: banks, the shadow banking system and insurance companies. It concludes that, while substantial progress has been made, the global economy nevertheless remains vulnerable to possible future financial instability. This possibility reflects three sets of concerns. First, measures taken to manage the crisis to date have actually made the prevention of future crises more difficult. Second, the continuing active debate over virtually every aspect of the new regulatory guidelines indicates that the analytical foundations of what is being proposed remain highly contestable. Third, implementation of the new proposals could suffer from different practices across regions. Looking forward, the financial sector will undoubtedly continue to innovate in response to competitive pressures and in an attempt to circumvent whatever regulations do come into effect. If we view the financial sector as a complex adaptive system, continuous innovation would only be expected. This perspective also provides a number of insights as to how regulators should respond in turn. Not least, it suggests that attempts to reduce complexity would not be misguided and that complex behavior need not necessarily be accompanied by still more complex regulation. Removing impediments to more effective self-discipline and market discipline in the financial sector would also seem recommended.

Testimony of Assistant Secretary Strickling at Hearing on “Ensuring the Security, Stability, Resilience, and Freedom of the Global Internet”

April 2, 2014 Comments off

Testimony of Assistant Secretary Strickling at Hearing on “Ensuring the Security, Stability, Resilience, and Freedom of the Global Internet”
Source: National Telecommunications and Information Administration

The Domain Name System (DNS) is a critical component of the Internet infrastructure. It allows users to identify websites, mail servers and other Internet destinations using easy-to-understand names (e.g.,www.ntia.doc.gov) rather than the numeric network addresses (e.g., 170.110.225.163) necessary to retrieve information on the Internet. A July 1, 1997, Executive Memorandum directed the Secretary of Commerce to privatize the Internet DNS in a manner that increases competition and facilitates international participation in its management. In June 1998, NTIA issued a statement of policy on the privatization of the Internet DNS, known as the DNS White Paper.[1] The White Paper concluded that the core functions relevant to the DNS should be primarily performed through private sector management. To this end, NTIA stated that it was prepared to enter into an agreement with a new not-for-profit corporation formed by private sector Internet stakeholders to coordinate and manage policy for the Internet DNS. Private sector interests formed ICANN for this purpose, and, in the fall of 1998, NTIA entered into a Memorandum of Understanding (MOU) with ICANN to transition technical DNS coordination and management functions to the private sector.

The MOU did not simply turn over management of the DNS to ICANN. Rather, the purpose of this agreement was to design, develop, and test mechanisms, methods, and procedures to ensure that the private sector had the capability and resources to assume important responsibilities related to the technical coordination and management of the DNS. The MOU evolved through several iterations and revisions as ICANN tested these principles, learned valuable lessons, and matured as an organization.

The MOU culminated in 2009 with the Affirmation of Commitments (Affirmation). The Affirmation signified a critical step in the successful transition to a multistakeholder, private-sector led model for DNS technical coordination, while also establishing an accountability framework of ongoing multistakeholder reviews of ICANN’s performance. To date, two iterations of the Accountability and Transparency Review Team (ATRT) have occurred. These teams, on which NTIA has participated actively with a broad array of international stakeholders from industry, civil society, the Internet technical community and other governments, have served as a key accountability tool for ICANN – evaluating progress and recommending improvements. We have seen marked improvements in ICANN’s performance with the implementation of the 27 recommendations made by ATRT1 and have full confidence this maturation will continue with the ongoing implementation of the 12 recommendations of ATRT2.

Throughout the various iterations of NTIA’s relationship with ICANN, NTIA has played no role in the internal governance or day-to-day operations of ICANN. NTIA has never had the contractual authority to exercise traditional regulatory oversight over ICANN.

See also: 4/02/2014 IANA Transition Testimony and Related Material

Subcommittee exposes Caterpillar offshore profit shifting

April 2, 2014 Comments off

Subcommittee exposes Caterpillar offshore profit shifting
Source: U.S. Senate Permanent Subcommittee on Investigations

Caterpillar Inc., an American manufacturing icon, used a wholly owned Swiss affiliate to shift $8 billion in profits from the United States to Switzerland to take advantage of a special 4 to 6 percent corporate tax rate it negotiated with the Swiss government and defer or avoid paying $2.4 billion in U.S. taxes to date, a new report from Sen. Carl Levin, the chairman of the U.S. Senate Permanent Subcommittee on Investigations shows.

“Caterpillar is an American success story that produces phenomenal industrial machines, but it is also a member of the corporate profit-shifting club that has shifted billions of dollars in profits offshore to avoid paying U.S. taxes,” Levin said. “Caterpillar paid over $55 million for a Swiss tax strategy that has so far enabled it to avoid paying $2.4 billion in U.S. taxes. That tax strategy depends on the company making the case that its parts business is run out of Switzerland instead of the U.S. so it can justify sending 85 percent or more of the parts profits to Geneva. Well, I’m not buying that story.”

Increasing homogeneity in global food supplies and the implications for food security

April 1, 2014 Comments off

Increasing homogeneity in global food supplies and the implications for food security
SOurce: Proceedings of the National Academy of Sciences

The narrowing of diversity in crop species contributing to the world’s food supplies has been considered a potential threat to food security. However, changes in this diversity have not been quantified globally. We assess trends over the past 50 y in the richness, abundance, and composition of crop species in national food supplies worldwide. Over this period, national per capita food supplies expanded in total quantities of food calories, protein, fat, and weight, with increased proportions of those quantities sourcing from energy-dense foods. At the same time the number of measured crop commodities contributing to national food supplies increased, the relative contribution of these commodities within these supplies became more even, and the dominance of the most significant commodities decreased. As a consequence, national food supplies worldwide became more similar in composition, correlated particularly with an increased supply of a number of globally important cereal and oil crops, and a decline of other cereal, oil, and starchy root species. The increase in homogeneity worldwide portends the establishment of a global standard food supply, which is relatively species-rich in regard to measured crops at the national level, but species-poor globally. These changes in food supplies heighten interdependence among countries in regard to availability and access to these food sources and the genetic resources supporting their production, and give further urgency to nutrition development priorities aimed at bolstering food security.

10Minutes on revenue recognition

March 28, 2014 Comments off

10Minutes on revenue recognition
Source: PricewaterhouseCoopers

After much deliberation, the FASB and IASB are set to release a final global revenue recognition standard in the coming months that will do away with current industry-specific accounting and instead apply a single set of principles to all revenue transactions. Changes to practices, processes and systems could ripple through your business. 10Minutes on revenue recognition provides information about the standard as well as insight into ways in which some companies are preparing for the broader impact.

The Importance of Engineering Talent to the Prosperity and Security of the Nation: Summary of a Forum (2014)

March 19, 2014 Comments off

The Importance of Engineering Talent to the Prosperity and Security of the Nation: Summary of a Forum (2014)
Source: National Academy

The quality of engineering in the United States will only be as good as the quality of the engineers doing it. The recruitment and retention of talented young people into engineering therefore need to be top national priorities, given the crucial importance of engineering to our prosperity, security, health, and well-being. Only 4.4 percent of the undergraduate degrees awarded by US colleges and universities are in engineering, compared with 13 percent in key European countries (the United Kingdom, Sweden, Finland, Denmark, Germany, and France) and 23 percent in key Asian countries (India, Japan, China, Taiwan, South Korea, and Singapore). In the past, the United States has been able to attract engineering graduate students and professionals from other countries to meet the need for engineering talent in the public and private sectors. But other countries are providing increasingly attractive opportunities for engineers, with excellent salaries, facilities, and economic growth potential. The United States can no longer assume that the best engineering talent in the world will want to come to this country.

The Importance of Engineering Talent to the Prosperity and Security of the Nation is the summary of a forum held during the National Academy of Engineering’s 2013 Annual Meeting. Speakers discussed the opportunities and challenges of creation and wise use of engineering talent, and made recommendations for recruitment and retention strategies. This report assesses the status of engineering education in the U.S. and makes recommendations to promote and improve engineering education.

Measuring Manufacturing: How the Computer and Semiconductor Industries Affect the Numbers and Perceptions

March 13, 2014 Comments off

Measuring Manufacturing: How the Computer and Semiconductor Industries Affect the Numbers and Perceptions
Source: Upjohn Institute for Employment Research

Growth in U.S. manufacturing’s real value-added has exceeded that of aggregate GDP, except during recessions, leading many to conclude that the sector is healthy and that the 30 percent decline in manufacturing employment since 2000 is largely the consequence of automation. The robust growth in real manufacturing GDP, however, is driven by one industry segment: computers and electronic products. In most of manufacturing, real GDP growth has been weak or negative and productivity growth modest. The extraordinary real GDP growth in computer-related industries reflects prices for computers and semiconductors that, when adjusted for product quality improvements, are falling rapidly. Productivity growth in these industries, in turn, largely reflects product and process improvements from research and development, not automation. Although computer-related industries have driven growth in the manufacturing sector, production has shifted to Asia, and the U.S. trade deficit in these products has soared since the 1990s. The outsized effect computer-related industries have on manufacturing statistics also may distort economic relationships in the data and result in perverse research findings. Statistical agencies should take steps to assure that the influence that computer-related industries have on manufacturing-sector statistics is transparent to data users.

Next-shoring: A CEO’s guide

February 4, 2014 Comments off

Next-shoring: A CEO’s guide
Source: McKinsey & Company

Rather than focus on offshoring or even “reshoring”—a term used to describe the return of manufacturing to developed markets as wages rise in emerging ones—today’s manufacturing strategies need to concentrate on what’s coming next. A next-shoring perspective emphasizes proximity to demand and proximity to innovation. Both are crucial in a world where evolving demand from new markets places a premium on the ability to adapt products to different regions and where emerging technologies that could disrupt costs and processes are making new supply ecosystems a differentiator. Next-shoring strategies encompass elements such as a diverse and agile set of production locations, a rich network of innovation-oriented partnerships, and a strong focus on technical skills.

Spheres of Exploitation: Thwarting Actors Who Profit from Illegal Labor, Domestic Servitude, and Sex Work

January 23, 2014 Comments off

Spheres of Exploitation: Thwarting Actors Who Profit from Illegal Labor, Domestic Servitude, and Sex Work (PDF)
Source: Migration Policy Institute

Large-scale movement across borders is too often exploited by “bad actors” who manipulate the system for profit. This report analyzes three spheres where perpetrators are motivated by the lure of high profits and low risks: the domestic care sector, the labor market, and the sex industry. It explores the obstacles that governments face in taking on these bad actors and examines the tools that exist to disrupt the business model of exploitation, including anti-trafficking legislation, penalties for employers who hire unauthorized workers, inspections, regulations, and public awareness campaigns.

Trade Reforms, Foreign Competition, and Labor Market Adjustments in the U.S.

January 22, 2014 Comments off

Trade Reforms, Foreign Competition, and Labor Market Adjustments in the U.S.
Source: Federal Reserve Board

Using data on trade-induced displacements, this paper documents that locations facing more foreign competition in the U.S. have: higher job destruction rates, lower job creation rates, and thereby lower employment rates. In contrast to standard trade theory, a model with variable markups and heterogeneous segmented labor markets is consistent with these facts. Foreign competition has a correlated effect on job destruction and job creation precisely because the most vulnerable locations also have lower productivity. Following an unexpected trade liberalization with limited mobility, employment sharply falls in the worse hit locations while welfare and employment increase in the aggregate.
</blockquote.

Zooming In: A Practical Manual for Identifying Geographic Clusters

January 10, 2014 Comments off

Zooming In: A Practical Manual for Identifying Geographic Clusters
Source: Harvard Business School Working Knowledge

This paper takes a close look at the reasons, procedures, and results of cluster identification methods. Despite being a popular research topic in strategy, economics, and sociology, geographic clusters are often studied with little consideration given to the underlying economic activities, the unique cluster boundaries, or the appropriate benchmark of economic concentration. Our goal is to increase awareness of the complexities behind cluster identification and to provide concrete insights and methodologies applicable to various empirical settings. The organic cluster identification methodology we propose is especially useful when researchers work in global settings where data available at different geographic units complicates comparisons across countries.

Follow

Get every new post delivered to your Inbox.

Join 859 other followers