International Trade and Finance
Exports and local sales Patterns of United States and Japanese multinational enterprises in East Asia
Activities of TNCs in extractive industries in Asia and the Pacific: Implications for development
The Mauritius Convention on Transparency and the Multilateral Tax Instrument: models for the modification of treaties?
The investment treaty network and the tax treaty network comprise more than 3,000 treaties each. The provisions of these treaties generally are highly customized on the basis of the investment flows and economic interests of the contracting States. The number of treaties in force and their customization potentially turn the amendment of these treaty networks in their entirety into a cumbersome and long process. To modify the treaty networks in a swift and coordinated manner, the investment treaty makers and the tax treaty makers almost contemporaneously developed the idea of implementing treaty changes through a single multilateral convention. On 10 December 2014, the United Nations adopted the Convention on Transparency in Treaty-based Investor–State Arbitration, also known as the Mauritius Convention. In addition, on 24 November 2016, the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (BEPS), commonly referred to as the Multilateral Tax Instrument, was concluded under the aegis of the Organisation for Economic Co-operation and Development (OECD). The Mauritius Convention and the Multilateral Tax Instrument share the object and purpose of modifying an extensive number of treaties. However, due to their novelty, little research has been done until now on their common characteristics and differences. The article aims at filling this gap by comparing both multilateral conventions. It also aims at drawing lessons from the analysis of both multilateral conventions that might be of benefit for future modifications of an extensive number of treaties through a single instrument.
Research notes: Social and human rights implications of TNC activities in the extractive industries
The United Nations and transnational corporations: A review and a perspective
International tax, regulatory arbitrage and the growth of transnational corporations
This paper traces the history of international corporate taxation, discusses how transnational corporations (TNCs), through their tax advisers, have helped to shape the system, and suggests that this is important in understanding the development of TNCs. It argues that a key competitive advantage of TNCs is their ability to exploit differences in corporate tax rules, as a form of regulatory arbitrage, which is facilitated by the inadequate coordination of those rules. It focuses on the divergence between the understanding in business, economics and international studies that TNCs are unitary firms and the principle which has increasingly hardened in international tax rules, especially on transfer pricing, that the various affiliates of TNCs in different countries should be treated as if they were independent entities dealing with each other at arm’s length. It argues that this facilitates tax avoidance, which is one of the strategies of the exploitation of regulatory differences, or regulatory arbitrage, which has contributed to the growth and oligopolistic dominance of large TNCs. While claiming that they merely obey the laws of each country where they do business, TNCs have taken advantage of their global reach to mould laws and normative practices, and develop structures taking maximum advantage of the loose coordination of global governance regimes.
Indian outward FDI: a review of recent developments.
This paper reviews the recent developments of Indian outward foreign direct investment (OFDI), which has been expanding rapidly, against the backdrop of liberalization and openness policies that have been instituted since the 1990s. The Indian OFDI landscape is changing with the participation of increasing numbers of Indian firms from a wide range of industries, the proactive role of State-owned enterprises in seeking overseas energy resources, and the growing distribution of investments, which are now geographically well spread across developed and developing regions. Indian firms are turning into global players with a global market focus and are undertaking overseas investments for international production, acquisition of foreign-created assets and foreign R&D activities.
The use of non-equity modalities and host-country impact: Some evidence from the international hotel industry and areas of further research
Making globalization moral?
Multinational enterprises and the Sustainable Development Goals: What do we know and how to proceed?
Multinational enterprises (MNEs) can play an important role in the implementation of the Sustainable Development Goals (SDGs). This article examines what we know about their participation in implementing the SDGs and their impact, both positive and negative, on people, the planet, prosperity and peace as identified in the United Nations (UN) 2030 Agenda. To this end, we review the research published in the main international business journals on five key SDGs that represent these “four Ps”, grouped into three categories: (1) poverty and inequality, (2) energy and climate change, and (3) peace. We summarize the findings of the 61 relevant studies and subsequently explore the UN’s “fifth P”, partnership, both in terms of published research on MNEs and the SDGs, and in terms of a collaborative agenda to help address the large challenges of the 2030 Agenda. In view of the relatively limited research on MNEs and SDGs thus far, academic institutions and international business scholars in particular are well-positioned to offer important insights about the role of business in supporting the SDGs, for which we offer suggestions, also in relation with other key actors.
Foreign direct investment as a catalyst for domestic firm development: The case of Sri Lanka
Foreign direct investment (FDI) carried out by multinational enterprises (MNEs) is recognized as a mechanism through which domestic firms can learn and improve competitiveness. Unlike the extant literature, which tends to focus on the aggregate effects of FDI in Sri Lanka, we investigate the role of FDI for domestic firm development at the firm level. Using World Bank Enterprise Survey data supplemented by industry data, preliminary investigation reveals that, compared with domestic firms, MNEs are larger, more productive, more profitable and more active in research and development (R&D). MNEs hire higher proportions of skilled workers and undertake more in-house training programs. They are also more export-oriented but rely more on inputs of foreign origin. The gaps between foreign and domestic firms indicate the potential that Sri Lankan firms can learn from MNEs and from FDI. The econometric study on firm-level productivity indicates positive direct effects and negative spillover effects of FDI on domestic firms. The findings have important policy implications.
Understanding South Africa’s current account deficit: The role of foreign direct investment income
This article highlights the prominence of net investment income payments made to foreign direct investors in South Africa’s current account deficit. After a brief history of South Africa’s balance of payments, we describe several factors driving the growth of South Africa’s direct investment assets and liabilities, including the roles of China and Africa as investment destinations and the relisting of major South African companies abroad. The slow accumulation of direct investment assets by South African firms before 2006, coupled with the higher returns on South Africa’s direct investment liabilities, has contributed to an imbalance in the country’s net FDI income, while a compositional shift in the stock of non-FDI liabilities has helped to decrease its payments to non-direct investors. If South African firms continue to invest productively abroad, net FDI income may contribute less to South Africa’s current account deficit in the future. The trade deficit remains a major area of concern.
Paper series: Commemorative papers on the work of John H. Dunning
Neighbours with different innovation patterns: The implications of industrial and FDI policy for the openness of local knowledge production
This article shows evidence that FDI policies during the catch-up process may leave a trace in the openness of innovation activities in latecomer economies, based on a comparative analysis between the Republic of Korea and China. The past industrial policies of the Republic of Korea favoured creating local technological competence based on the transfer of foreign knowledge in codified form, leading to a low level of global connection in local knowledge creation. By contrast, Chinese policies encouraged the entrance of foreign firms in the Chinese market, leading to a higher level of global interaction in innovation activities. Based on the findings, the article presents policy recommendations and suggests avenues for future research.
Book reviews: Global electrification. Multinational enterprise and international finance in the history of light and power, 1878-2007
Home economy heterogeneity in the determinants of China’s inward foreign direct investment
The co-evolution of international business connections and domestic technological capabilities: Lessons from the Japanese catch-up experience
Mavluda Sattorova. International Investment Law and Development: Bridging the Gap, edited by Stephan W. Schill, Christian J. Tams and Rainer Hofmann
Conceptual issues underpinning the thorny relationship between international investment law and development can be grouped into a number of key themes. At the core of one such theme are questions pertaining to substantive and procedural investment protection rules. Are these rules development-friendly? Do they reflect the evolving views on development and the changing role of foreign investors who are now expected to not only create economic growth but also do so in environmentally and socially-friendly manner? And, do international investment norms provide sufficient room for host states to retain their right to pursue public policy objectives, including policies fostering sustainable development?