Regulatory Burdens in Tax Administration and Firms’ Compliance Costs in Africa

This paper examines the effect of regulatory burdens related to tax administration on firms’ compliance costs in Africa. Using cross-country firm-level data, the results show that regulatory burdens related to tax administration significantly increase firms’ compliance costs compared to burdens related to other kinds of government regulations. The results further show that firms’ relationships with tax officials affect their compliance costs. While firms that are frequently inspected by tax officials have higher compliance costs, firms that are requested to pay bribes by tax officials, on the other hand, have lower compliance costs. These results, which remain robust after accounting for other firm-, sector- and country-specific factors, highlight that regulatory burdens related to taxation play a bigger role in increasing overall compliance costs in Africa than other forms of regulatory burdens, and that firms may look to informal ways to reduce the burden by paying bribes to tax officials.Department for International Development (DFID)Bill and Melinda Gates Foundatio

Regulatory Burdens in Tax Administration and Firms’ Compliance Costs in Africa

This paper examines the effect of regulatory burdens related to tax administration on firms’ compliance costs in Africa. Using cross-country firm-level data, the results show that regulatory burdens related to tax administration significantly increase firms’ compliance costs compared to burdens related to other kinds of government regulations. The results further show that firms’ relationships with tax officials affect their compliance costs. While firms that are frequently inspected by tax officials have higher compliance costs, firms that are requested to pay bribes by tax officials, on the other hand, have lower compliance costs. These results, which remain robust after accounting for other firm-, sector- and country-specific factors, highlight that regulatory burdens related to taxation play a bigger role in increasing overall compliance costs in Africa than other forms of regulatory burdens, and that firms may look to informal ways to reduce the burden by paying bribes to tax officials.Department for International Development (DFID)Bill and Melinda Gates Foundatio

Industrial Clusters Promotion as a tool for private sector development: The UNIDO experience in Ethiopia

Policies aimed at boosting the interaction and cooperation of economic actors in industrial clusters might represent a crucial strategy for industrial upgrading and development in poor countries. This policy brief discusses some recent industrial cluster programmes carried out by UNIDO in Ethiopia and highlights the main advantages of cluster policies and the lessons learned

Did British colonial rule in Africa foster a legacy of corruption among local elites?

Corruption is considered one of the main contributors to Africa’s development challenges, but less is known about the determinants of corruption and why the levels of corruption vary between countries. A new study finds that the legacy of colonial rule and its influence on local elites (chiefs) may be part of the explanation. The authors present empirical evidence that British colonial rule in Africa may have fostered the corruption of chiefs and undermined society’s trust in them

Information Technology and Fiscal Capacity in a Developing Country: Evidence from Ethiopia

taxation; fiscal capacity; information technology; developing economy.Governments in developing countries are typically constrained by a limited fiscal capacity to finance the provision of essential public goods – a constraint that has been cited as one of the fundamental challenges to economic development. Several developing countries have recently implemented electronic tax systems (ETS) to improve monitoring tax compliance using modern information technology (such as electronic sales registry machines (ESRMs)). Despite the widespread adoption of ETS throughout the developing world, there is a dearth of systematic evidence on its impact. In this paper, we document the impact of ETS using quasi-experimental evidence from Ethiopia – a low-income country in Sub-Saharan Africa which expanded use of ESRMs in recent years. We use administrative data covering the entire set of those registered for Value Added Tax (VAT) in Ethiopia. We find that ETS resulted in a large and significant increase in VAT payments (of about 20 log points). We also find evidence that the effect is driven primarily by firms that are more likely to evade taxes prior to ETS adoption, suggesting that ETS has minimised tax evasion.DfID, NORAD

Cluster development programs in Ethiopia: Evidence and policy implications

[Introduction] Cluster development programs have become increasingly widespread tools in fostering innovation and growth of a competitive private sector in developing countries, including Ethiopia. Naturally emerged clusters of micro- and small-scale enterprises (MSEs) are predominantly common in Ethiopia in traditional and labor intensive sectors in rural and poor urban areas. This has attracted the interest of policy-makers and various development organizations such as UNIDO to promote such clusters because of the direct impact they have on poverty. A cluster based development has also been given a top priority in the country’s current five years Growth and Transformation Plan (GTP) as the main tool for spurring income and employment growth among MSEs. Owing to the existing policy enthusiasm to promote clusters, this report will pro-vide additional background information to assist the ongoing efforts by the government and UNIDO and highlight possible potential avenues for intervention and investment targeting. The report reviews the relevant literature on cluster development, discusses specific case study evidence for Ethiopia, and provides explorative evidence from more aggregate data on overall colocalization of enterprises in Ethiopia. More specifically, the report provides a general background on cluster development concept, the advantages of industrial clusters and the rationale for cluster development interventions in Section 2 and 3. A brief discussion of the MSE sector and clusters in Ethiopia is provided in Section 4. In Section 5, different past and ongoing cluster development programs in Ethiopia that are implemented both by UNIDO and the government are discussed. These programs will be presented in detail and lessons learnt will be drawn. In Section 6, we use more aggregate data to chart the localization of firms across different regions in Ethiopia to provide an overall picture of colocalization of firms across the country. We also present some evidence on characteristics of such locations, in terms of overall firm size, productivity, and linkages with the local economy. Section 7 summarizes the main findings of the report and provides some conclusions and policy recommendations for further integration of the cluster development methodology in to the national development processes

STAT3 regulated ARF expression suppresses prostate cancer metastasis.

Prostate cancer (PCa) is the most prevalent cancer in men. Hyperactive STAT3 is thought to be oncogenic in PCa. However, targeting of the IL-6/STAT3 axis in PCa patients has failed to provide therapeutic benefit. Here we show that genetic inactivation of Stat3 or IL-6 signalling in a Pten-deficient PCa mouse model accelerates cancer progression leading to metastasis. Mechanistically, we identify p19(ARF) as a direct Stat3 target. Loss of Stat3 signalling disrupts the ARF-Mdm2-p53 tumour suppressor axis bypassing senescence. Strikingly, we also identify STAT3 and CDKN2A mutations in primary human PCa. STAT3 and CDKN2A deletions co-occurred with high frequency in PCa metastases. In accordance, loss of STAT3 and p14(ARF) expression in patient tumours correlates with increased risk of disease recurrence and metastatic PCa. Thus, STAT3 and ARF may be prognostic markers to stratify high from low risk PCa patients. Our findings challenge the current discussion on therapeutic benefit or risk of IL-6/STAT3 inhibition.Lukas Kenner and Jan Pencik are supported by FWF, P26011 and the Genome Research-Austria project “Inflammobiota” grants. Helmut Dolznig is supported by the Herzfelder Family Foundation and the Niederösterr. Forschungs-und Bildungsges.m.b.H (nfb). Richard Moriggl is supported by grant SFB-F2807 and SFB-F4707 from the Austrian Science Fund (FWF), Ali Moazzami is supported by Infrastructure for biosciences-Strategic fund, SciLifeLab and Formas, Zoran Culig is supported by FWF, P24428, Athena Chalaris and Stefan Rose-John are supported by the Deutsche Forschungsgemeinschaft (Grant SFB 877, Project A1and the Cluster of Excellence --“Inflammation at Interfaces”). Work of the Aberger lab was supported by the Austrian Science Fund FWF (Projects P25629 and W1213), the European FP7 Marie-Curie Initial Training Network HEALING and the priority program Biosciences and Health of the Paris-Lodron University of Salzburg. Valeria Poli is supported by the Italian Association for Cancer Research (AIRC, No IG13009). Richard Kennedy and Steven Walker are supported by the McClay Foundation and the Movember Centre of Excellence (PC-UK and Movember). Gerda Egger is supported by FWF, P27616. Tim Malcolm and Suzanne Turner are supported by Leukaemia and Lymphoma Research.This is the final version of the article. It first appeared from Nature Publishing Group via http://dx.doi.org/10.1038/ncomms873

Diffusion of labor standards from origin to host countries : cross county evidence from multinational companies in Africa

This study empirically examines diffusion of labor standards from origin to host countries by investigating whether better labor standards of MNCs’ origin countries are correlated with higher wages of workers in host countries in Africa. MNCs originating from countries with more rights of association and collective bargain and those coming from countries with unions that have strong wage bargaining power are found to pay significantly higher wages to their workers in host countries. These findings highlight that, although domestic policies and institutions may be important determinants of labor-related standards, they do not operate in isolation from external influences coming from origin countries