Tag Archives: OECD

The looming harm of tax harmonization

By Akvile Jaseviciute and Bhuvam Patel – The OECD’s proposals to harmonize international tax regimes were generally welcomed by governments without considering potential benefits of tax competitiveness. Blinded by their wish to stop multinational corporations from moving their business to jurisdictions with more favorable tax regimes, few considered the practical implications of OECD’s plans. Currently, OECD countries have divergent tax regimes – the 2021 edition of the International Tax Competition Index produced by the Tax Foundation ranked countries regarding tax competitiveness. Estonia earned the top spot in the ranking because of its relatively low corporate tax rate, while Italy and France fared poorly due to features like punitive wealth and financial transaction taxes. We hence question, why countries with favorable tax systems should be held back by a harmonized but uncompetitive tax regime?

OECD Proposal Problems

Current OECD proposals on tax harmonization focus on ending the perceived tax ‘unfairness’ while providing little practical benefits. The first Pillar aims to set tax brackets universally on companies making global sales above €20 Billion and profit margins of more than 10%. However, in practice, large companies often place the taxpaying burden on other stakeholders – employees or investors. Therefore, instead of benefiting the most vulnerable, the proposal could be detrimental to workers as companies choose to cut wages instead of letting their revenues shrink. If insufficiently considered, such an outcome could further disadvantage low qualification workers, which are already significantly affected by the Covid-19 pandemic. more>

Innovating Education and Educating for Innovation

OECD – As in all sectors, innovation will be essential to bring about qualitative changes in education, as opposed to the quantitative expansion seen so far. These changes are needed to increase efficiency and improve the quality equity of learning opportunities.

Education has not managed to harness technology to productivity, improve efficiency, increase quality and foster equity in the way other public sectors have. At the same time education can also foster innovation in society at large by developing the right skills to nurture it. These skills, including critical thinking, creativity and imagination, can be fostered through appropriate teaching, and practices such as entrepreneurship education.

Governments should develop smart innovation strategies for education with the right policy mix to give meaning and purpose to innovation, including creating an innovation-friendly culture.

The “digital divide” has become a skills gap between the haves and have-nots. Digital skills generate a significant return in terms of employment, income and other social outcomes for those who have them, but set up barriers to better life opportunities for those without.

The introduction of digital technologies in schools has not yet delivered the promised improvements of better results at lower cost. There is only a weak, and sometimes negative, association between the use of ICT in education and performance in mathematics and reading, even after accounting for differences in national income and socio-economic status.

Gaps in digital skills of both teachers and students, difficulties in locating high-quality digital learning resources and software, a lack of clarity over learning goals, and insufficient pedagogical preparation on how to blend technology meaningfully into teaching, have driven a wedge between expectations and reality.

Schools and governments must address these challenges or technology may do more harm than good. more> https://goo.gl/Npz7S0

Updates from OECD

Financial Education for Youth
OECD – The term “financial education” in a school context is used to refer to the teaching of financial knowledge, understanding, skills, behaviors, attitudes and values which will enable students to make savvy and effective financial decisions in their daily life and when they become adults.

The outcome of financial education is typically referred to as financial literacy or financial capability.

The individual is responsible for the financial product he or she decides to purchase, and the individual will face all the consequences of the choice. In addition, the current economic and financial environment can make it even more difficult for individuals to find and remain in a stable and salaried occupation.

All of these trends have transferred the responsibility of major financial decisions to individuals. more> http://tinyurl.com/md368eg

The Development of Fixed Broadband Networks

OECD – Content delivery and cloud computing platforms optimize the delivery of content and services across the network. The Internet was designed as an end-to-end network that provided two-way transport between devices and their users at the edge of the network. CDNs are optimized for one-way distribution of video, images, and other content from large content providers such as Netflix or the BBC’s iPlayer to individual users.

Cloud computing is designed to move the computing and storage functionality of the end-user device into the network.

All fixed communications networks share basic economic characteristics. The first is high fixed costs (capital expenditures), both in absolute terms and relative to variable costs (operational expenditures). The numbers vary based on technology and the scale of the network. Under any conditions, though, running a wire into each residence, and linking those last-mile connections through a wired distribution network, is a costly endeavor. In addition to direct expenses, the necessity of digging up streets, gaining access to telephone poles or conduit space, and gaining physical access to homes is a significant burden. more> http://tinyurl.com/lesfj7a

Updates from OECD

Cutting the Gordian knot in SME financing: the power of information
By Marcus Schuller – A first insight into SME financing: it lacks of standardisation.

SMEs are difficult to analyse due to their heterogeneous character. Small companies have different needs than medium-sized ones. Financing differs strongly between sectors and countries.

Although banks like to talk about servicing clients in advising them on financing, information asymmetry between the bank and an SME representative puts the latter at a disadvantage. By not asking the right questions and not knowing the limits in negotiations, the agreement automatically favours the bank. SME managers and owners need to be supported by independent advice. more> http://tinyurl.com/m3kau4p

Updates from OECD

Is GDP still useful?
OECD – GDP is the sum of total value added in the economy, or total incomes, and involves a large number of assumptions or conventions. For example, government consumption is included even though it is not a market transaction, whereas housework is not.

Many “bads”, from spending on security or activities that cause pollution, are included; many “goods”, notably the huge benefits consumers gain from variety and innovation, are largely excluded. GDP puts equal weight on spending for current consumption and investment spending; it is no use as an indicator of sustainability, or whether future generations will be at least as well off as we are.

Macroeconomic policy requires a measure of total economic activity. However, economists and policy-makers ought to stop using GDP growth as a shorthand for society’s overall economic welfare. That is better measured by a ‘dashboard’ approach, such as the OECD Better Life Index. While these need further development, they have the great advantage of showing the separate elements that contribute to social welfare, and the trade-offs between them. more> http://tinyurl.com/lhb6hsu

Updates from OECD

BOOK REVIEW

Making Innovation Policy Work: Learning from Experimentation, OECD, The World Bank.


OECD, The World Bank – Industrial and innovation policies characterized by top-down government interventions are not the right approach to development.

The reasons for the failures of such policies are well known, and include the risks of capture by vested interests, lack of information on the economy and strong information asymmetry with private actors, and a lack of capability in the public sector for effective policy making.

Another, more appropriate approach innovation (and industrial) policy, involves search, experimentation, monitoring learning and adaptation, all of which need to occur in a context of international openness to knowledge, trade, investment and competition. This new approach also rests on close co-operation with private and non-governmental actors, who are often better placed than governments to identify barriers to innovation, and point to areas for productive investment or policy action. more> http://tinyurl.com/qgyq3us

Using Joe And Jane’s Money, The OECD Exploits Joe And Jane

By Mario H. Lopez – The OECD’s deceptive analysis naturally leads to spurious conclusions for aggressive regulation targeting telecommunication providers, but which in the end would hurt consumers more.

Increasing broadband adoption is not only a question of providing access, but making it reliable and cost effective. This is particularly important in rural and developing areas, where mobile broadband has the most potential to benefit communities economically and socially. Capping pricing structures, hindering profit and business expansion will limit the capacity for operators to expand coverage and improve services, making broadband access cost-prohibitive for millions of people. more> http://tinyurl.com/b4jtlho