Commodities and Linkages: Meeting the Policy Challenge

The results of detailed empirical enquiry into the nature and determinants of the breadth and depth of linkages in and out of the commodities sector in eight SSA countries (Angola, Botswana, Gabon, Ghana, Nigeria, South Africa Tanzania, and Zambia) and six sectors (copper, diamonds, gold, oil and gas, mining services and timber) has shown extensive scope for industrial development (MMCP DP 13, 2011). A primary conclusion of this research was that policy in both the private and public realm was a prime factor holding back the development of linkages. Addressing this problem requires the closing of three sets of misalignments between policy and practice – within the corporate sector, within the public sector, and between the public sector and other stakeholders involved in linkage development. In addition, specific policies need to be developed, monitored and implemented in relation to the three contextual drivers of linkages from the commodity sector – skills and capabilities, infrastructure and policies towards ownership

Central Asia's growing partnership with China. EUCAM Working Paper No. 4, 09 October 2009.

Since the start of the 2000s, the China has become an increasingly important player on the Central Asian scene, which until then had been essentially divided between Russia and the US. Beijing has managed to make a massive and multiform entry onto the Central Asian geo-political landscape: it has proven itself a loyal partner on the level of bilateral diplomacy and has succeeded in turning the Shanghai Cooperation Organisation (SCO) into a regional structure appreciated by its members. China has also become a leading actor in trade as well as in the hydrocarbon sector and infrastructure. This paper focuses on the political and geopolitical impact of Beijing's growing influence, along with the economic implications of the Chinese presence in Central Asia. Moreover, the paper assesses the extent to which this will affect the objectives of the European Union in the region. A final key question debated here is an assessment of possible joint interests of China and the EU in Central Asia

Ownership structure, board characteristics, and tax aggressiveness

Tax aggressiveness, as commonly proxied by the effective tax rate (ETR), measures a firm’s effort spent on minimizing its tax payments. It is suggested that more tax aggressive firms have greater incentives to allocate resources to minimize taxes and thus have lower ETRs. Corporate governance has been continuously receiving attention in literature across different fields and can affect a firm’s tax strategy through its control mechanism. This thesis investigates how corporate governance influences a firm’s tax aggressiveness. The main hypothesis of this thesis is whether firms with good corporate governance will have less incentives and opportunities to manage tax aggressively. Specifically, I take advantages of the distinct institutional settings in China to study whether the Chinese firm’s tax aggressiveness is affected by ownership structure and the characteristics of board of directors. Using all non-financial listed companies in the Chinese A-share market during 2003 and 2009 period, I find that firms with state-controlled nature and lower proportion of controlling shares pursue less aggressive tax strategies and maintain higher ETRs. In addition, my finding is consistent with prior literature that a higher percentage of the boards’ shareholdings and dual service duties performed by the board chairman result in lower ETRs. However, I do not find a significant relationship between the percentage of independent directors and tax aggressiveness which may suggest the ineffective role of independent directors in China

Commodities and Linkages: Industrialisation in Sub-Saharan Africa

In a complementary Discussion Paper (MMCP DP 12 2011) we set out the reasons why we believe that there is extensive scope for linkage development into and out of SSA’s commodities sectors. In this Discussion Paper, we present the findings of our detailed empirical enquiry into the determinants of the breadth and depth of linkages in eight SSA countries (Angola, Botswana, Gabon, Ghana, Nigeria, South Africa Tanzania, and Zambia) and six sectors (copper, diamonds, gold, oil and gas, mining services and timber). We conclude from this detailed research that the extent of linkages varies as a consequence of four factors which intrinsically affect their progress – the passage of time, the complexity of the sector and the level of capabilities in the domestic economy. However, beyond this we identify three sets of related factors which determined the nature and pace of linkage development. The first is the structure of ownership, both in lead commodity producing firms and in their suppliers and domestic customers. The second is the nature and quality of both hard infrastructure (for example, roads and ports) and soft infrastructure (for example, the efficiency of customs clearance). The third is the availability of skills and the structure and orientation of the National System of Innovation in the domestic economy. The fourth, and overwhelmingly important contextual factor is policy. This reflects policy towards the commodity sector itself, and policy which affects the three contextual drivers, namely ownership, infrastructure and capabilities. As a result of this comparative analysis we provided an explanation of why linkage development was progressive in some economies (such as Botswana) and regressive in others (such as Tanzania). This cluster of factors also explains why the breadth and depth of linkages is relative advanced in some countries (such as South Africa), and at a very nascent stage in other countries (such as Angola)

A Conceptual Overview to Understand Commodities, Linkages and Industrial Development in Africa

Sub-Sahara African commodity exporting economies have benefitted greatly from the commodities boom of the past decade. The conventional wisdom argues that resource extraction is corrosive of industrial development due to a combination of the macroeconomic consequences of resource exploitation and the assumed enclave nature of mineral and energy extraction. The paper challenges this pessimistic ‘resource curse’ argument, arguing that there are unexploited opportunities for promoting industrial development through the development of linkages from the commodities sector. In particular, these opportunities may be greater for backward than for forward linkages, particularly in the minerals and energy sectors. In making this case, this Discussion Paper draws on the experience of high-income countries which have resource-intensive economic structures, the geographical specificity of many resources and the growing interest of large resource-extracting firms in outsourcing the production of inputs which are outside of their core competences, It sets out a general model of linkages between industry and services and the commodities sector which distinguishes between win-win and win-lose outcomes. The paper concludes with a brief review of the reasons why Governments might wish to intervene to support linkages between the commodities and the industrial and service sectors