The economic development of small countries : problems, strategies and policies

The number of studies dealing with economic problems of small countries is growing. They have contributed to our general knowledge on the economics of these societies. Nevertheless, there is no clear evidence that a successful economic policy will be following from this knowledge. This, of course, is not unusual in matters of science. First of all, the exploration of an economic problem is one thing; the solution of problems is another thing altogether. And indeed, the economic problems of small countries, especially of the very small ones, seem so grave that one could seriously question any pretention of being able to solve these. We could emphasize the lack of development possibilities and point at the long list of impediments, at political and social structures which hamper development and which are quite difficult to change, if at all. All of these arguments could be substantiated. They have in fact been substantiated for a number of very small countries, where a virtual absence of resources or diseconomies of small scale seem to deprive their inhabitants of rather basic facilities (5, p.90]. But, for the sake of our argument, let us assume another reason why, so far, development successes in very small economies have not been realized, and let us point to the limited ability of science to propose effective measures to solve real world problems. Our argument is not a philosophical one. We, therefore, neglect the reasoning that solutions to problems almost always create new problems. Our argument is of a more theoretical nature. We simply feel that the ability of science to suggest policies is sometimes rather limited, precisely because of the limitations in our scientific way of dealing with reality. And, since some of these limitations, hampering our insights into the economic life of very small economies, seem to follow from the conception of science itself - since, so to speak, some of these limitations are self-imposed - we propose to look at the economic structures of very small economies in a different way. We have toyed with the idea to illustrate our largely theoretical exercise with a case study on Malta, but, our Institute being a very small economy itself, with limited resources, we had to confine ourselves to mere illustrations. For this and other reasons, our remarks should be seen as no more than a brief exploratory note on a large problem. Clearly, our approach does not pretend to render all other possible (scientific) approaches on formulating an economic policy obsolete or unjustified.peer-reviewe

Homozygous whole body Cbs knockout in adult mice features minimal pathology during ageing despite severe homocysteinemia

Deficiencies in Cystathionine-β-synthase (CBS) lead to hyperhomocysteinemia (HHCy), which is considered a risk factor for cardiovascular, bone and neurological disease. Moreover, CBS is important for the production of cysteine, hydrogen sulfide (H2 S) and glutathione. Studying the biological role of CBS in adult mice has been severely hampered by embryological disturbances and perinatal mortality. To overcome these issues and assess the effects of whole-body CBS deficiency in adult mice, we engineered and characterized a Cre-inducible Cbs knockout model during ageing. No perinatal mortality occurred before Cbs-/- induction at 10 weeks of age. Mice were followed until 90 weeks of age and ablation of Cbs was confirmed in liver and kidney but not in brain. Severe HHCy was observed in Cbs-/- (289 ± 58 µM) but not in Cbs+/- or control mice (<10 µM). Cbs-/- showed impaired growth, facial alopecia, endothelial dysfunction in absence of increased mortality, and signs of liver or kidney damage. CBS expression in skin localized to sebaceous glands and epidermis, suggesting local effects of Cbs-/- on alopecia. Cbs-/- showed increased markers of oxidative stress and senescence but expression of other H2 S producing enzymes (CSE and 3-MST) was not affected. CBS deficiency severely impaired H2 S production capacity in liver, but not in brain or kidney. In summary, Cbs-/- mice presented a mild phenotype without mortality despite severe HHCy. The findings demonstrate that HHCy is not directly linked to development of end organ damage

An evolutionary approach to international political economy: the case of corporate tax avoidance

Corporate tax avoidance is both widespread and diverse in its practical mechanics. The scope of the phenomenon often leads economists to conclude that in the jungle of economic competition, tax planning (or optimisation) is among the necessary tools to ensure the survival of the fittest. This theory is increasingly associated with a Darwinian theory of economic evolution. In this paper, I develop a contrasting framework of the evolutionary political economy of corporate tax avoidance. Analysing core concepts of Old Institutionalist Economics (OIE), I examine the core drivers of corporate tax avoidance in a globalised system of states. The major contrast, I find, is between that of the corporate and legal personality and the institutional environment in which it operates. Historically, each corporate entity has been considered a separate legal person, yet a series of ‘mutations’ of incorporations laws created a widening gap between theory and reality, and these, in turn, give rise to tax arbitrage. Narrowing this gap, however, impinges on another venerable historical institution, the institution of sovereignty and sovereign inequality

Is the water footprint an appropriate tool for forestry and forest products: The Fennoscandian case

The water footprint by the Water Footprint Network (WF) is an ambitious tool for measuring human appropriation and promoting sustainable use of fresh water. Using recent case studies and examples from water-abundant Fennoscandia, we consider whether it is an appropriate tool for evaluating the water use of forestry and forest-based products. We show that aggregating catchment level water consumption over a product life cycle does not consider fresh water as a renewable resource and is inconsistent with the principles of the hydrologic cycle. Currently, the WF assumes that all evapotranspiration (ET) from forests is a human appropriation of water although ET from managed forests in Fennoscandia is indistinguishable from that of unmanaged forests. We suggest that ET should not be included in the water footprint of rain-fed forestry and forest-based products. Tools for sustainable water management should always contextualize water use and water impacts with local water availability and environmental sensitivity

Group subsidiaries, tax minimization and offshore financial centres: Mapping organizational structures to establish the ‘in-betweener’ advantage

International business and public policy research have examined the techniques that multinational enterprises (MNEs) use to shift revenues to subsidiaries in offshore financial centres (OFCs) in order to minimize tax liability and arbitrage for their advantage. While study of such tax arbitrage strategies has looked to geographical locations and legal dimensions to better understand these strategies, it has ignored the structural and organizational relationship between MNEs and their subsidiaries. We define two distinct types of OFC-based corporate entities based on their location among and apparent control over other MNE affiliates: ‘stand-alone’ OFCs at the end of a chain of MNE subsidiaries; and ‘in-betweener’ OFCs with equity control over further entities and hence apparent flexibility to redirect profits to other MNE subsidiaries further down the chain. We hypothesize that when MNEs have in-betweener OFCs controlling a substantial share of overall MNE profits, this indicates greater MNE interest in aggressive tax planning (ATP). We then evaluate empirical support for our claims based on an ‘equity mapping’ approach identifying stand-alone and in-betweener OFCs in 100 of the largest MNEs operating globally. This study demonstrates that a key factor determining tax arbitrage is not the amount of value registered on OFC subsidiaries’ balance sheets, but rather the portion of the group’s operating revenues and net income controlled by OFC subsidiaries. National taxing authorities could benefit from tracking in-betweener OFC locations and behaviour to counter ATP strategies, decrease sovereign arbitrage, and increase MNE tax revenue