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15641. Corporate tax avoidance and industry concentration

Author:
Farid Toubal, Mathieu Parenti, and Julien Martin
Publication Date:
07-2020
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
This paper argues that tax avoidance by large corporations has contributed to the 25% increase in concentration among U.S. firms since the mid-1990s. Corporate tax avoidance gives large firms a competitive edge, which translates into larger market shares and an increase in the granularity of the economy. We develop IV and difference-in-differences strategies that show the causal impact of tax avoidance on firm-level sales. Had firms not resorted to tax avoidance in 2017, our results imply that the average industry concentration would have been 8.3% lower, which is around its early 2000 level.
Topic:
Economics, International Political Economy, Markets, Tax Systems, Corporations, Tax Evasion, and Corporate Tax
Political Geography:
United States and Global Focus

15642. Covid 19: a new challenge for the EMU

Author:
Anne-Laure Delatte and Alexis Guillaume
Publication Date:
07-2020
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
Although the pandemic was an exogenous shock, it triggered portfolio rebalancing in the Euro Area (EA) implying a divergence of sovereign risk premia in the first phase of the crisis eventually followed by a narrowing of the spreads. We estimate the determinants of sovereign bond spreads in the EA during the pandemic from January 2 2020 to May 25 2020. We find that: 1) the countries’ resilience to the COVID shock depended on healthcare capacity, the strength of the banking sector and the fiscal outlook; 2) during the crisis, ECB speeches were a game changer and made a much greater contribution than securities purchase programs; 3) coordination by the European Council also helped to reduce the spreads but the effect was partly offset by loan-based financial assistance programs.
Topic:
Debt, Monetary Policy, European Union, Finance, COVID-19, Bonds, and European Monetary Union
Political Geography:
Europe

15643. Grey Zones in Global Finance: the Distorted Geography of Cross-Border Investments

Author:
Vincent Vicard, Amélie Guillin, and Anne-Laure Delatte
Publication Date:
05-2020
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
Tax avoidance schemes generate artificially complex cross-border financial structures inflating measured international investment stocks in tax havens. Using a standard gravity framework, we estimate that about 40% of global assets (FDI, portfolio equity and debt) are `abnormal' – unexplained – stocks. Abnormal stocks are increasing over time and concentrated in a limited number of jurisdictions. Six jurisdictions including three European countries are the largest contributors: Cayman, Bermuda, Luxembourg, Hong Kong, Ireland and the Netherlands. Interestingly, the Luxleaks in 2014 do not appear to have diverted cross-border investments away.
Topic:
Economics, International Political Economy, International Trade and Finance, Finance, Borders, Investment, and Stock Markets
Political Geography:
Global Focus

15644. Private Credit under Political Influence: Evidence from France

Author:
Anne-Laure Delatte, Adrien Matray, and Noémie Pinardon-Touati
Publication Date:
04-2020
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
Formally independent private banks change their supply of credit to the corporate sector for the constituencies of contested political incumbents in order to improve their reelection prospects. In return, politicians grant such banks access to the profitable market for loans to local public entities among their constituencies. We examine French credit registry data for 2007--2017 and find that credit granted to the private sector increases by 9%--14% in the year during which a powerful incumbent faces a contested election. In line with politicians returning the favor, banks that grant more credit to private firms in election years gain market share in the local public entity debt market after the election is held. Thus we establish that, if politicians can control the allocation of rents, then formal independence does not ensure the private sector's effective independence from politically motivated distortions.
Topic:
Economics, International Political Economy, Private Sector, Credit, and Banking
Political Geography:
France

15645. Currency Misalignments and Exchange Rate Regimes in Latin American countries: A Trade-Off issue

Author:
Jorge Carrera, Blaise Gnimassoun, Valérie Mignon, and Romain Restout
Publication Date:
04-2020
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
This paper conducts an in-depth empirical investigation on the impact of the exchange rate regime (ERR) on real currency misalignments in a panel of 17 Latin American countries over the 1970-2016 period. We consider explicitly the two dimensions of misalignments, size and persistence, and evaluate four different ERR classifications. We also pay attention to cross-sectional dependencies across countries that appear to be important in Latin America, and provide several robustness checks. Our main findings show that, although fixed ERR perform well in limiting the size of misalignments – and in reducing inflation and fiscal deficit – the disequilibria are more persistent. On the contrary, allowing for more flexibility reduces persistence but increases the size of misalignments. Overall, we show that Latin American countries face a crucial trade-off when they have to choose their ERR.
Topic:
Economics, International Political Economy, Exchange Rate Policy, and Currency
Political Geography:
Latin America

15646. Immigration and Worker-Firm Matching

Author:
Gianluca Orefice and Giovanni Peri
Publication Date:
03-2020
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
The process of matching between firms and workers is an important mechanism in determining the distribution of wages. In a labor market characterised by large dispersion of workers' productivity and worker-firm complementarity, high quality firms have strong incentives to screen for the quality of workers. This process will increase the positive quality association of firm-worker matches known as positive assortative matching (PAM). Immigration in a local labor market, by increasing the variance of workers abilities, may drive stronger PAM between firms and workers. Using French matched employer-employee (DADS) data over the period 1995-2005 we document that positive supply-driven changes of immigrant workers in a district increased the strength of PAM. We then show that this association is consistent with causality, is quantitatively significant, and is associated with higher average productivity and firm profits, but also with higher wage dispersion. We also show that the increased degree of positive assortative matching is mainly reached by high-productive firms "losing" lower quality workers and "attracting" higher quality workers.
Topic:
Economics, International Political Economy, Labor Issues, Immigration, Immigrants, and Migrant Workers
Political Geography:
France

15647. Cross-border Investments and Uncertainty Firm-level Evidence

Author:
Rafael Cezar, Timothée Gigout, and Fabien Tripier
Publication Date:
03-2020
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
This paper studies the impact of uncertainty on cross-border investments. We build a data-set of firm-level outward Foreign Direct Investments between 2000 and 2015. We create a time and country varying measure of uncertainty based on the dispersion of idiosyncratic investment returns. An increase in uncertainty delays cross-border flows to the affected country. Yet, this average effect hides strong heterogeneity. Firms with low ex-ante performance durably reduce their foreign investments. Meanwhile high-performing firms increase their investments after the initial shock. We interpret these results as the evidence of a cleansing effect of uncertainty shocks among multinational firms in the presence of financial frictions.
Topic:
Economics, International Political Economy, Foreign Direct Investment, Borders, and Investment
Political Geography:
Global Focus

15648. Weather Shocks and Migration Intentions in Western Africa: Insights from a Multilevel Analysis

Author:
Simone Bertolia, Frédéric Docquier, Hillel Rapoport, and Ilse Ruyssen
Publication Date:
02-2020
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
We use a multilevel approach to characterize the relationship between weather shocks and (internal and international) migration intentions. We combine individual survey data on migration intentions with measures of localized weather shocks for Western African countries over 2008-2016. A meta-analysis on results from about 310,000 regressions is conducted to identify the specification of weather anoma-lies that maximizes the goodness of fit of our empirical model. We then use this best specification to document heterogeneous mobility responses to weather shocks, which can be due to differences in long-term climatic conditions, migration percep- tions, or adaptation capabilities. We find that droughts are associated with a higher probability of migration intentions in Senegal, Niger and Ivory Coast. The effect on international migration intentions are only significant in Niger. These effects are amplified, but qualitatively similar, when restricting the sample to rural low-skilled respondents.
Topic:
Economics, International Political Economy, Migration, Labor Issues, Skilled Labor, and Weather
Political Geography:
West Africa, Senegal, Ivory Coast, and Niger

15649. Does Birthplace Diversity affect Economic Complexity? Cross-country Evidence

Author:
Dany Bahar, Hillel Rapoport, and Riccardo Turati
Publication Date:
01-2020
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
We empirically investigate the relationship between a country’s economic complexity and the diversity in the birthplaces of its immigrants. Our cross-country analysis suggests that birthplace diversity is strongly and positively associated with economic complexity. This holds particularly for diversity among highly educated migrants and for countries at intermediate levels of economic complexity. The results are robust to accounting for previous trends in birthplace diversity as well as to using alternatives diversity measures. We address endogeneity concerns by instrumenting diversity through predicted stocks from a pseudo-gravity model as well as from a standard shift-share approach. Finally, we provide evidence suggesting that birthplace diversity boosts economic complexity by increasing the diversification of the host country’s export basket.
Topic:
Economics, International Political Economy, Multiculturalism, Immigrants, Diversity, and Economic Complexity
Political Geography:
Global Focus

15650. Africa's Economic Response to the Covid-19 Pandemic

Author:
V. Srinivas
Publication Date:
10-2020
Content Type:
Research Paper
Institution:
India International Centre (IIC)
Abstract:
Nelson Mandela once said, ‘do not judge me by my successes, judge me by how many times I fell down and got back up again.’ Economists have warned that the Covid-19 pandemic will have a substantial economic impact on Sub-Saharan Africa, and the economic costs could be devastating. The June 2020 Regional Economic Outlook for Sub-Saharan Africa projects that real GDP will contract by 3.2 per cent, and per capita income will fall by 5.5 per cent in 2020, levels last seen a decade ago. Lockdowns have affected informal sector workers, and small and medium enterprises in service sectors, resulting in more poverty and income inequality. The International Monetary Fund (IMF) has said that Africa’s regional policies should remain focused on safeguarding public health, supporting people and businesses hardest hit by the crisis, and facilitating recovery. The magnitude of the economic crisis in Africa can be gauged from the slowdown being witnessed in the larger economies. In South Africa, economic activity is projected to contract by 8 per cent in 2020, in Nigeria, the economic contraction is projected at 5.4 per cent in 2020, in Angola, economic activity will fall by 4 per cent, and in Ethiopia, economic growth is projected at 1.9 per cent, which is still 1.3 per cent below 2019 growth rates.
Topic:
Economics, International Political Economy, Economic Policy, Pandemic, COVID-19, and Regional Economy
Political Geography:
Africa, South Africa, and Sub-Saharan Africa

15651. Dual Use in the DPRK

Author:
Margaret Croy
Publication Date:
04-2020
Content Type:
Working Paper
Institution:
James Martin Center for Nonproliferation Studies
Abstract:
Several states have succeeded in extracting “yellowcake” uranium from phosphoric acid as part of the phosphate fertilizer production process. The Democratic People’s Republic of Korea (DPRK) has both the means and motivation to undertake such work, thus significantly altering existing open-source assessments of how much yellowcake uranium North Korea could produce annually, which in turn affects estimates of how many nuclear warheads DPRK can make. There is ample rationale for the DPRK to pursue this method of uranium extraction. The dual usage of existing infrastructure would both conceal the activity and make it more difficult for international audiences to positively identify and condemn. The DPRK certainly needs fertilizer, and the information on how to extract uranium from its production is readily available. Lastly, this method of yellowcake production embodies the policy of byungjin—parallel nuclear-weapon development and economic expansion—a hallmark of Kim Jong Un’s strategy. Given these factors, the rationale for the pursuit of this method is clear. The evidence is even more so. The first section of the paper explains the science behind uranium extraction from phosphoric acid produced as an intermediary in the production of fertilizer from phosphate rock. The second section highlights some of the historical cases of states using this method to obtain uranium. The third section elucidates the reasoning and rationale for using this method in the DPRK, and the fourth section examines the open-source evidence available indicating that this method of obtaining uranium—however uncommon—is in use in the DPRK today, and is likely to continue and expand in scale.
Topic:
Science and Technology, Mining, Manufacturing, and Uranium
Political Geography:
Global Focus

15652. Transparency and Reporting on Arms Exports within and from the EU

Author:
Ian Stewart
Publication Date:
07-2020
Content Type:
Working Paper
Institution:
James Martin Center for Nonproliferation Studies
Abstract:
The EU’s annual report on arms export control presently lags behind the national reports of many countries. The introduction of a searchable online database will be a substantial step in increasing the user-friendliness of the report. This paper makes recommendations with regard to readability, comprehensiveness and comparability. Perhaps the principal recommendation is that steps be taken to harmonise the data provided under the categories ‘licensed value’ and ‘actual exports’, which are presently not consistently interpreted across the EU. The main argument of this paper is that the EU should move towards using data visualisation to complement the lengthy statistical tables in the annual report and thus make it more readable. The EU and its Member States should also explore opportunities to enhance the data contained in the report to include additional identified data fields, narrative sections to complement the statistical data, and disaggregated data on licence denials. In identifying additional data fields that could be included, the paper also examines the challenges associated with the provision of the data in each case.
Topic:
Arms Control and Proliferation, Regional Cooperation, European Union, Exports, and Illegal Trade
Political Geography:
Europe

15653. US Nonproliferation Cooperation with Russia and China

Author:
Robert Einhorn
Publication Date:
10-2020
Content Type:
Working Paper
Institution:
James Martin Center for Nonproliferation Studies
Abstract:
The United States has at times worked cooperatively with Russia and China to promote shared nonproliferation objectives. But with no end in sight to the current precipitous decline in Washington’s bilateral relations with Moscow and Beijing, constructive engagement on today’s nonproliferation challenges has become increasingly problematic. Unless the United States and its two great power competitors can find a way to carve out areas of cooperation in otherwise highly adversarial relationships, the remarkably positive record of international efforts to prevent additional countries from acquiring weapons will be difficult to sustain. From sometimes partners to frequent foes, this Occasional Paper examines the history of US cooperation with Russia and China on key issues including Iran, North Korea, Syria, international nonproliferation mechanisms, and nuclear security. It also outlines the obstacles to future nonproliferation cooperation, as well as the growing proliferation threats that require such cooperation. Most importantly, it identifies several possible areas where the United States can hope to find common ground with both countries. With relationships with Russia and China reaching new lows and unlikely to improve for the foreseeable future, finding a way to for the United States to work cooperatively with both countries will not be easy. Bridges to constructive engagement have been burned and will be difficult to rebuild. However, the author points out that constituencies for cooperation remain in all three countries, including in government bureaucracies. “As hard as it may be to find common ground in otherwise highly adversarial relationships, it is imperative that the US administration in office after January 2021 make every effort to do so. Cooperation with America’s two great power rivals will not always guarantee success, but the absence of such cooperation will surely increase the risk of failure.”
Topic:
Diplomacy, International Cooperation, Nuclear Weapons, Military Strategy, and Nonproliferation
Political Geography:
Russia, China, Europe, Asia, United States of America, and North America

15654. Human Centric Data For Sustainable City – Part: 5

Author:
Teemu Ropponen
Publication Date:
11-2020
Content Type:
Video
Institution:
Turkish Economic and Social Studies Foundation (TESEV)
Abstract:
In the interview that has been made under Friedrich Naumann Foundation (FNS) supported TESEV project called Improving Data Ecosystems for Sustainable City, Teemu Ropponen (General Manager of MyData Global) answers the question of “How do you think this work can be improved in the future?”.
Topic:
Development, Governance, Urbanization, Urban, Sustainability, and Data
Political Geography:
Global Focus

15655. Human Centric Data For Sustainable City – Part: 4

Author:
Teemu Ropponen
Publication Date:
11-2020
Content Type:
Video
Institution:
Turkish Economic and Social Studies Foundation (TESEV)
Abstract:
In the interview that has been made under Friedrich Naumann Foundation (FNS) supported TESEV project called Improving Data Ecosystems for Sustainable City, Teemu Ropponen (General Manager of MyData Global) answers the question of “How does your ecosystem contribute to sustainable city?”.
Topic:
Governance, Urbanization, Urban, Cities, Sustainability, and Data
Political Geography:
Global Focus

15656. Human Centric Data For Sustainable City – Part: 3

Author:
Teemu Ropponen
Publication Date:
11-2020
Content Type:
Video
Institution:
Turkish Economic and Social Studies Foundation (TESEV)
Abstract:
In the interview that has been made under Friedrich Naumann Foundation (FNS) supported TESEV project called Improving Data Ecosystems for Sustainable City, Teemu Ropponen (General Manager of MyData Global) answers the question of “How do citizens and other city stakeholders benefit from your work?”.
Topic:
Governance, Urbanization, Citizenship, Urban, Sustainability, and Data
Political Geography:
Turkey and Global Focus

15657. Human Centric Data For Sustainable City – Part: 2

Author:
Teemu Ropponen
Publication Date:
11-2020
Content Type:
Video
Institution:
Turkish Economic and Social Studies Foundation (TESEV)
Abstract:
In the interview that has been made under Friedrich Naumann Foundation (FNS) supported TESEV project called Improving Data Ecosystems for Sustainable City, Teemu Ropponen (General Manager of MyData Global) answers the question of “In this project we define data ecosystem as a network of stakeholders operating in one or more of the processes of creating, collecting, processing, and sharing data. MyData Global seems, in that perspective, to be a data ecosystem. How do cities benefit from your work?”.
Topic:
Governance, Urbanization, Urban, Sustainability, and Data
Political Geography:
Turkey and Global Focus

15658. Human Centric Data for Sustainable City – Part: 1

Author:
Teemu Ropponen
Publication Date:
11-2020
Content Type:
Video
Institution:
Turkish Economic and Social Studies Foundation (TESEV)
Abstract:
In the interview that has been made under Friedrich Naumann Foundation (FNS) supported TESEV project called Improving Data Ecosystems for Sustainable City, Teemu Ropponen (General Manager of MyData Global) answers the question of “MyData Global’s mission is ‘empowering individuals by improving their right to self-determination regarding their personal data’. Why does human centric data matter?”.
Topic:
Governance, Urbanization, Urban, Sustainability, and Data
Political Geography:
Turkey and Global Focus

15659. Gaziantep95: Data-Driven Policy Tool Project Report

Author:
Baran Karsak and Bürge Elvan Erginli
Publication Date:
09-2020
Content Type:
Special Report
Institution:
Turkish Economic and Social Studies Foundation (TESEV)
Abstract:
The report contains certain Gaziantep-specific (Gaziantep95) details and preliminary findings on the project process of the Data-driven Policy Tool interactive platforms that have been designed for Istanbul, Izmir and Gaziantep so far and that serve the Data-driven Decision-Making Processes study which is a main area of focus of the Urban95 project.
Topic:
Governance, Urbanization, Urban, Sustainability, Data, and Digital Policy
Political Geography:
Turkey and Gaziantep

15660. The Impacts of Covid-19 on Children and Social Policy Responses

Author:
Başak Akkan
Publication Date:
08-2020
Content Type:
Policy Brief
Institution:
Turkish Economic and Social Studies Foundation (TESEV)
Abstract:
Children had received less attention in the early stages of the pandemic. The mortality rates among children have been almost non-existent, and consequently they have not constituted a risk group. However, in a country with high incidences of child poverty, Covid-19 could have a significant impact in aggravating the existing inequalities among children and in creating new forms of deprivation. Within this context, the impact of Covid-19 on children is analyzed under four headings: The poverty aggravating effect of the pandemic; the manifestation of inequalities regarding the physical (home) environment and living conditions of children; the deepening of digital inequalities and access to education; and increased and unrecorded cases of domestic violence and child abuse amid the lockdowns.
Topic:
Children, Inequality, Social Policy, COVID-19, Health Crisis, and Abuse
Political Geography:
Turkey, Middle East, and Mediterranean