An Overview and Examination of the Indian Services Sector

India’s service sector has grown rapidly since the 1990s. Domestic demand for services has increased as incomes have risen, triggering the expansion of industries such as banking, education, and telecommunications. Exports have also increased rapidly, led by information technology and business process outsourcing (IT-BPO). India’s ability to offer low-cost, high-quality IT-BPO services has made it a world leader in this industry. However, employment in services has not grown as quickly as output. The majority of India’s jobseekers are low-skilled, but demand for workers is growing fastest in higher-skill industries. The supply of highly-skilled workers has not kept pace with demand, causing wages to increase faster for these workers than for lower-skilled ones. India’s government has supported the growth of service industries through a mix of deregulation, liberalization, and incentive programs, such as the Software Technology Parks of India. Nevertheless, burdensome regulations, poor infrastructure, and foreign investment restrictions continue to affect service firms’ ability to do business. USITC analysis suggests that additional liberalization would lead to an increase in India’s imports of services

Firm Ownership and Internal Labor Practices in a Transition Economy: An Exploration of Worker Skill Acquisition in Vietnam

One feature common to many post-socialist transition economies is a relatively compressed wage structure in the state owned sector. We conjecture that this compressed wage structure creates weak incentives for work effort and worker skill acquisition and thus presents adverse consequences for the entire transition economy if a substantial portion of the labor force works in the state sector. We explore firm wage incentives and worker training, as well as other labor practices and outcomes, in a transition setting with matched firm and worker data collected in one of the largest provinces of Vietnam – Ho Chi Minh City. The Vietnamese state sector exhibits a compressed wage distribution in relation to foreign invested privately owned firms. State wage practices stress tenure over worker productivity and their wage policies result in flatter wage – experience profiles and lower returns to education. The state work force is in greater need for formal training, a need that is, in part, met through direct government financing. In spite of the opportunities for government financed training and at least partly due to inefficient worker incentives, state firms, by certain measures, exhibit lower levels of labor productivity. The private sector comparison group to state firms for all of these findings is foreign owned firms. The internal labor practices of foreign firms are more consistent with a view of profit-maximizing firms operating with no political constraints. This is not the case for Vietnamese de novo private firms that exhibit much more idiosyncratic behavior and whose labor practices are often indistinguishable from state firms. The exact reasons for this remain a topic of ongoing research yet we conjecture that various private sector constraints, including limited access to formal capital, play an important role.http://deepblue.lib.umich.edu/bitstream/2027.42/40082/3/wp696.pd

Which Way to Converge? The Europeanisation of National Tax Systems

In this article we investigate in how far European Integration stimulates policy convergence in various subfields of tax policy. We see that several causal mechanisms contribute to an EU-wide convergence of tax policies: imposition, competition, harmonization and learning/ communication. Whereas personal income taxation does not exhibit strong EU-specific reasons for policy convergence, corporate income taxation is spurred by deeper market integration and imposition through the ECJ. More importantly, EU harmonization and (strategic forms) of learning within EU member states have had a direct and noticeable impact on national systems of VAT and excise taxation

Global Innovation Policy Index

Ranks fifty-five nations' strategies to boost innovation capacity: policies on trade, scientific research, information and communications technologies, tax, intellectual property, domestic competition, government procurement, and high-skill immigration

International Mobility of Skilled Labour: Analytical and Empirical Issues, and Research Priorities

The international mobility of skilled labour has become a key component of the global knowledge-based economy. Rising levels of foreign direct investment (FDI), international trade, research and development (R&D), technological advances and increased demand for skilled workers seem to have all contributed to an increase in the international mobility of skilled labour. Internationally mobile individuals are often found participating in industries that are largely knowledge-based and global in scope. As a result, it has become increasingly important that the economic policy discussion surrounding the international mobility of skilled labour must take into consideration the wide variety of ways the migration of skilled labour affects the economy. Numerous drivers, policy and non-policy induced, are at work. Attention must now turn towards the links between these movements and the institutions regulating them; the performance in the trade of goods and services; FDI; human capital formation and multinational enterprises location; and income convergence among countries. This paper provides an overview of the literature on four key issues surrounding the international mobility of skilled workers, while identifying potential directions for future research. First, global trends of recent international skilled migratory flows – magnitude and their composition in terms of underlying skills/education of migrants with a focus on Canada-US migratory flows. Second, fundamental (non-policy) drivers of the increased skilled migratory flows, especially among advanced countries. Third, economic costs and benefits associated with cross-country movement of skilled labour and the main factors conditioning these costs and benefits. Fourth, how policy has adjusted or should adjust to increased skilled labour mobility in the global economy?

De facto capital mobility, equality, and tax policy in open economies

This paper attempts at giving theoretical and empirical answers to the remaining puzzles in the literature on tax competition: the persistently high tax rates on mobile capital and the large variation in domestic tax systems. I argue that governments face a political trilemma, in which they cannot maintain the politically optimal level of public good provision, reduce capital taxes to competitive levels and implement a political support-maximizing mix of tax rates on capital and labour simultaneously. In particular, while legal restriction on capital flows have been eliminated by virtually all OECD countries, de facto capital mobility falls short of being perfect. Limits to full capital mobility result from ownership structures: the higher the concentration of capital, the higher the de facto mobility of capital and the lower the equilibrium tax rate. Second, the demand for the provision of public goods further constraints governments’ choices of the capital tax rate. If revenue from taxation of mobile factors declines, politicians cannot necessarily cut back spending without losing political support. Policy makers, accordingly, do not face a simple optimization problem when deciding on capital taxation. Rather, they have to choose a tax system which allows them to supply an appropriate level of public goods. Policy makers finally face a trade-off resulting from the redistributive conflict between capital-owners and workers. This conflict does not resemble a mere zero-sum game, because lower levels of capital taxation are likely to improve aggregate welfare, but the decision on capital taxation also cannot be analyzed in isolation from the distributive effects of reducing taxes on mobile factors. This political logic of tax competition generates important predictions which are tested empirically for 23 OECD countries over 30 years within a spatial econometrics framework

Foreign Direct Investments in Business Services: Transforming the Visegrád Four Region into a Knowledge-based Economy?

Foreign direct investments (FDIs) in the service sector are widely attributed an important role in bringing more skill-intensive activities into the Visegrad Four (V4). This region—comprising Poland, the Czech Republic, Hungary and Slovakia—relied heavily on FDIs in manufacturing, which was often found to generate activities with limited skill content. This contribution deconstructs the chaotic concept of “business services” by analysing the actual nature of service sector activities outsourced and offshored to the V4. Using the knowledge-based economy (KBE) as a benchmark, the paper assesses the potential of service sector outsourcing in contributing to regional competitiveness by increasing the innovative capacity. It also discusses the role of state policies towards service sector FDI (SFDI). The analysis combines data obtained from case studies undertaken in service sector outsourcing projects in V4 countries. Moreover, it draws on interviews with senior employees of investment promotion agencies and publicly available data and statistics on activities within the service sector in the region. It argues that the recent inward investments in business services in the V4 mainly utilize existing local human capital resources, and their contribution to the development of the KBE is limited to employment creation and demand for skilled labour

Assessing Barriers to Trade in Education Services in Developing Asia - Pacific Countries:An Empirical Exercise

The study, thus, touches only tip of an iceberg in terms of its analytical power to explain movement of students across nations. It points out to the definite existence of country specific barriers and from a pilot case study in India, highlights some of these possible barriers. However, future studies should be attempted to understand the extent of barriers to trade in education services through more intensive primary survey and bilateral country studies.Trade in Education Services, Asia-Pacific