Latin America leads drug policy reform

By Benoît Gomis, research analyst at the International Security Research Department of Chatham House

Optimal monetary and fiscal policies in a search-theoretic model of money and unemployment

In this paper we study optimal policies in an environment where search frictions both in labor and goods markets give rise to unemployment and fiat money, as in Berentsen, Menzio, and Wright (American Economic Review, 2011). The underlying frictions that give rise to endogenous unemployment and fiat money also result in inefficient outcomes. Here we show that efficiency can be restored whenever lump sum monetary transfers are possible and a decentralized production subsidy financed by money printing and a vacancy subsidy financed by a dividend tax exist. This is the case even when the Hosios and Friedman rules do not hold

Sanctions and illicit trade: British American Tobacco’s activities in Iran (2000–2014)

Previous research has documented how British American Tobacco (BAT) and other transnational tobacco companies (TTCs) smuggled their own products into Iran in the 1990s in order to circumvent sanctions and other trade restrictions. In the early 2000s, BAT, along with other TTCs, signed legal agreements with Iranian authorities to sell its products legally and curb illicit tobacco trade (ITT). Our analysis of previously unreleased internal BAT documents (covering 2000–2014) suggests BAT remained potentially involved in ITT after those agreements were signed. Meanwhile, BAT engaged with government authorities to tackle ITT primarily for reputational and commercial purposes. With a business model based on a high number of contractors and distributors, extensive engagement with government authorities, and an anti-illicit trade strategy focusing more on reputation and growth than on effectively controlling its supply chain, further investigation into BAT’s activities in Iran – including potential sanctions breaching – may be warranted. This is especially relevant as, in April 2023, BAT agreed to pay penalties exceeding US$629 million to resolve charges of bank fraud and sanctions violations in North Korea, following a criminal investigation by the US Department of Justice and Office of Foreign Assets Control. Exploration of BAT’s activities in Iran would provide insight into the credibility of BAT’s response following these penalties, with the company having claimed that “Adhering to rigorous compliance and ethics standards has been, and remains, a top priority”

“We Think Globally”: The Rise of Paraguay’s Tabacalera Del Este as a Threat to Global Tobacco Control

Background  Leading transnational tobacco companies (TTCs) began to expand their operations in Latin America in the 1960s. This included legally exporting their cigarettes to Paraguay during the 1960s which, in turn, were illegally re-exported to Argentina and Brazil. By the 1990s, competition between BAT and PMI for this lucrative illicit market, focusing on low-priced brands, prompted manufacturing in Paraguay. Paraguayan manufacturing rapidly grew after the introduction of a new cigarette export tax in Brazil in 1999. Methods  We systematically searched Truth Tobacco Industry Documents (TTID) to understand the activities and strategies of leading TTCs in Paraguay and subregion over time. We applied the analytical framework of Lee and Eckhardt (2017) to understand Tabesa’s global business strategy. We searched the websites of TTCs and Tabesa for activities since the mid 2000s to understand how the companies publicly describe these strategies. We used the United Nations Commodity Trade Statistics Database (UN Comtrade) as an independent source to crosscheck statements by Tabesa executives about export markets. We contextualized and triangulated our findings with 42 key informant interviews. Results  Tabesa became the largest cigarette manufacturer in Paraguay, and one of the largest companies in the country, through complicity in the illicit trade. Enabled by market conditions created by leading TTCs, and a permissive regulatory environment in Paraguay, evidence suggests Tabesa had become a major source of illicit cigarettes across Latin America and beyond by the late 2000s. Although Brazil continues to account for the bulk of Tabesa’s revenues, findings suggest that the company is aspiring to compete with TTCs in markets worldwide through legal and illegal sales. Conclusion  There is a need for fuller understanding of the risks to global tobacco control from local companies aspiring to compete with TTCs. The rise of Tabesa is part of the changing nature of the illicit trade in tobacco products which must be taken into account in implementing the Framework Convention on Tobacco Control (FCTC) and its Protocol to Eliminate Illicit Trade in Tobacco Products. Potential conflicts of interest concerning Tabesa illustrate the importance of FCTC Article 5.3 on industry interference. There is also an urgent need to address the lack of independent and rigorous data on the illicit tobacco trade in the region

From Transit Hub to Major Supplier of Illicit Cigarettes to Argentina and Brazil: The Changing Role of Domestic Production and Transnational Tobacco Companies in Paraguay Between 1960 and 2003

Background  Paraguay has reportedly been a major transit hub for illicit tobacco products since the 1960s, initially to supply markets in Argentina and Brazil and, more recently, other regional markets and beyond. However, to date there has been no systematic analysis, notably independent of the tobacco industry, of this trade including the roles of domestic production and transnational tobacco companies (TTCs). This article fills that gap by detailing the history of Paraguay’s illicit cigarette trade to Brazil and Argentina of TTC products and Paraguayan production between 1960 and 2003. The effective control of illicit cigarette flows, under Article 15 of the World Health Organization (WHO) Framework Convention on Tobacco Control (FCTC) and the Protocol to Eliminate the Illicit Trade in Tobacco Products, requires fuller understanding of the changing nature of the illicit trade. Methods  We systematically searched internal industry documents to understand the activities and strategies of leading TTCs in Paraguay and subregion over time. We also mapped illicit trade volume and patterns using US government and UN data on the cigarette trade involving Paraguay. We then estimated Paraguay’s cigarette production from 1989 to 2003 using tobacco leaf flows from the United Nations Commodity Trade Statistics Database (UN Comtrade). Results  We identify four phases in the illicit tobacco trade involving Paraguay: 1) Paraguay as a transit hub to smuggle BAT and PMI cigarettes from the U.S. into Argentina and Brazil (from the 1960s to the mid-1970s); 2) BAT and PMI competing in north-east Argentina (1989–1994); 3) BAT and PMI competing in southern and southern-east Brazil (mid to late 1990s); and 4) the growth in the illicit trade of Paraguayan manufactured cigarettes (from the mid- 1990s onwards). These phases suggest the illicit trade was seeded by TTCs, and that the system of supply and demand on lower priced brands they developed in the 1990s created a business opportunity for manufacturing in Paraguay. Brazil’s efforts to fight this trade, with a 150% tax on exports to Latin American countries in 1999, further prompted supply of the illicit trade to shift from TTCs to Paraguayan manufacturers. Conclusion  This paper extends evidence of the longstanding complicity of TTCs in the illicit trade to this region and the consequent growth of Paraguayan production in the 1990s. Our findings confirm the need to better understand the factors influencing how the illicit tobacco trade has changed over time, in specific regional contexts, and amid tobacco industry globalization. In Paraguay, the changing roles of TTC and domestic production have been central to shifting patterns of illicit supply and distribution since the 1960s. Important questions are raised, in turn, about TTCs efforts to participate as legitimate partners in global efforts to combat the problem, including a leading role in data gathering and analysis

Islamic terrorism in the UK since 9/11: reassessing the 'soft' response

James Edwards; Benoît Gomi

Introduction to the macroeconomic dynamics special issue on inequality, public insurance, and monetary policy

We present a set of research and briefly describe the individual contributions to the Macroeconomic Dynamics special issue on inequality, public insurance, and monetary policy.</p

Potential corruption risks in health financing arrangements: Report of a rapid review of the literature

Introduction and purpose: Corruption in health financing poses a significant risk to the achievement of universal health coverage and the health-related targets of the Sustainable Development Goals. Corruption in health systems not only wastes limited public resources and/or development funds allocated to the health sector, but also limits population access to goods and services, undermines citizens’ trust in governments and causes health services to deteriorate. Poor and marginalized populations typically suffer the most from the consequences of corruption in health systems. Accordingly, anti-corruption, transparency and accountability measures are central components of health systems strengthening for universal health coverage. Such measures are also critical for upholding the right to health. The purpose of this rapid literature review is to identify potential corruption risks in relation to health financing. It also seeks to illuminate anti-corruption, transparency and accountability measures that may be helpful in reducing the risk of corruption in health financing. Methods: A rapid literature review was conducted to provide an evidence-base on areas at risk of corruption in the core health financing functions of revenue raising, pooling (within the broader context of public sector management), benefit design and purchasing. Search terms were limited to the English language and informed by WHO publications on health financing and universal health coverage. Experts in health financing and corruption provided inputs on the literature, structure and content of the review. An initial pool of 185 articles was screened for relevance, of which 112 articles were summarized and included in the literature pool. Additional articles were added following suggestions from peer reviewers, resulting in a total of 125 articles and documents in the final paper. A rapid review is limited in that its process gives preference to research that is easily retrievable and, therefore, some bias is necessarily embedded in the methodology. As this review is targeted to specific search terms, it is limited insofar as it does not address all of the core issues related to corruption risks in health financing, including absenteeism, petty theft and other types of public sector abuse. Findings: The studies highlight how health financing arrangements may be at risk of corruption. In the area of revenue raising, embezzled funds and charging of informal payments for health services are identified risks. In the area of pooling, the studies emphasize weak budget management and poor record keeping as issues that may allow corruption, such as the embezzlement of pooled funds. In the area of purchasing, the procurement process stands out as being particularly vulnerable to corruption; for example, fraud may be found in provider billing mechanisms. Lastly, in the area of benefit design, conflicts of interest, lack of transparency in the selection of medicines for national/ institutional formularies, and overly complex benefit systems can make health systems more vulnerable to corruption. Conclusions: To reduce the risk of corruption in health financing arrangements, the literature recommends anti-corruption, transparency and accountability measures including: ensuring adequate funding to health systems; enhancing transparency and accountability; raising awareness; improving monitoring and oversight; integrating anti- corruption, transparency and accountability into health financing diagnostics and policy; and finally, building effective accountability mechanisms. Such measures will reduce the likelihood of corruption in health financing arrangements and help to strengthen health systems towards universal health coverage.World Health Organizatio