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Posts Tagged ‘Globalization’

Why Taxation Must Go Global

Posted by hkarner - 3. November 2014

Date: 30-10-2014
Source: Project Syndicate

Wolfgang Schäuble has been Germany’s Federal Minister of Finance since 2009, helping to engineer the country’s remarkable post-crisis growth. He previously served as Minister of the Interior during the governments of Angela Merkel (2005-09) and Helmut Kohl (1989-91), and has been Chairman of Germany’s ruling Christian Democratic Union.

BERLIN – We are witnessing profound changes in the way that the world economy works. As a result of the growing pace and intensity of globalization and digitization, more and more economic processes have an international dimension. As a consequence, an increasing number of businesses are adapting their structures to domestic and foreign legal systems and taxation laws.

Thanks to technical advances in the digital economy, companies can serve markets without having to be physically present in them. At the same time, sources of income have become more mobile: There is an increasing focus on intangible assets and mobile investment income that can easily be “optimized” from a tax point of view and transferred abroad.

Tax legislation has not kept pace with these developments. Most of the tax-allocation principles that apply today date back to a time when doing business internationally primarily meant transporting goods across a border to a neighboring country. But rules that were devised for this in the 1920s and 1930s are no longer suitable for today’s international integration of economic processes and corporate structures. They need to be adapted to the economic reality of digital services. Den Rest des Beitrags lesen »

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Globalization Is in Retreat? Not So Fast

Posted by hkarner - 18. September 2014

Date: 17-09-2014
Source: The New York Times

Not long ago, executives at the Dutch multinational Royal DSM, a globe-girdling maker of nutritional supplements and high-tech materials, used to require a battery of internal studies to decide where to do a deal or locate a new manufacturing plant.

But today, “we won’t even do the study,” Stephan B. Tanda, the managing board member with responsibility for the Americas, told me. “It’s clear it will be the United States.”

The United States, he points out, has lots of cheap natural gas and a very lightly regulated labor market. At the same time, China, where Royal DSM has some 40 plants, is losing its edge. “It is less attractive than it used to be as a source from which to serve the world,” Mr. Tanda said.

For the last time the United States was as competitive as it is now, he added, “you have to go back to before the first oil shock in the 1970s.” Of the $3.6 billion in acquisitions by Royal DSM since 2010, 80 percent has come to the United States.

Could globalization make a U-turn? Den Rest des Beitrags lesen »

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Henry Kissinger on the Assembly of a New World Order

Posted by hkarner - 31. August 2014

Date: 29-08-2014
Source: The Wall Street Journal

The concept that has underpinned the modern geopolitical era is in crisis

The concept of order that has underpinned the modern era is in crisis, writes Henry Kissinger.
Libya is in civil war, fundamentalist armies are building a self-declared caliphate across Syria and Iraq and Afghanistan’s young democracy is on the verge of paralysis. To these troubles are added a resurgence of tensions with Russia and a relationship with China divided between pledges of cooperation and public recrimination. The concept of order that has underpinned the modern era is in crisis.

The search for world order has long been defined almost exclusively by the concepts of Western societies. In the decades following World War II, the U.S.—strengthened in its economy and national confidence—began to take up the torch of international leadership and added a new dimension. A nation founded explicitly on an idea of free and representative governance, the U.S. identified its own rise with the spread of liberty and democracy and credited these forces with an ability to achieve just and lasting peace. The traditional European approach to order had viewed peoples and states as inherently competitive; to constrain the effects of their clashing ambitions, it relied on a balance of power and a concert of enlightened statesmen. The prevalent American view considered people inherently reasonable and inclined toward peaceful compromise and common sense; the spread of democracy was therefore the overarching goal for international order. Free markets would uplift individuals, enrich societies and substitute economic interdependence for traditional international rivalries. Den Rest des Beitrags lesen »

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Globalization’s Old “Race to the Bottom” Finds Unlikely Winners

Posted by hkarner - 28. August 2014

Date: 28-08-2014
Source: Forbes

Globalization has oft been described as a race to the bottom, but as with any race, there is much jockeying for position. The nations in the lead may surprise some corporations and nations, suggests a report from the Boston Consulting Group. China is not necessarily the big winner as demonstrated by expanded auto production in the United Kingdom, and Mexico is emerging as an alternative manufacturing center even as its workers earn more than Chinese counterparts. Brazil, China, Czech Republic, Poland and Russia are described under pressure; Australia, Belgium, France, Italy, Sweden and Switzerland are losing ground; India, Indonesia, Netherlands and the United Kingdom are holding steading; and rising stars include Mexico and the United States. Labor costs and exchange rates are but two of a complex range of factors in locating factory sites. “On balance, much of the gains have also come at the expense of American wages,” writes Kenneth Rapoza for Forbes. “But besides stagnant wage growth, sustained productivity gains, a steady dollar, and energy-cost advantages have made life easier for American manufacturing.” – YaleGlobal

In competition for jobs and manufacturing, nations jockey for position, Boston Consulting Group report finds – the US, Mexico are described as “rising stars”
Kenneth Rapoza

Remember in the 1990s when activists were protesting the World Bank and International Monetary Fund as the architects of globalization? They were evil. The world was going to hell in a hand basket. Globalization was a race to the bottom, where the Chinese were getting all the jobs and the middle class American was moving into trailer homes.

But life, be it personal or socio-economic, does not move in a straight line. A new report by the Boston Consulting Group  is another case in point.  BCG’s latest shows that China’s economic rise and Europe’s stunning economic decline, has led to major global shifts in manufacturing. Comparing 25 of the largest exporting economies over a 10 year period, BCG takes the old Happy Meal economic model to task. Den Rest des Beitrags lesen »

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Globalization’s Worst Crisis

Posted by hkarner - 27. August 2014

Date: 25-08-2014
Source: Businessworld: Nayan Chanda

Sanctions and counter-sanctions in response to Russian intervention in Ukraine will disrupt global trade. Russia is the world’s eighth largest economy. Industries will find stunted growth and respond with new patterns as retail outlets in Russia cope with empty shelves, European airlines mull closure of air space over Russia, agriculture producers confront stockpiles, and energy buyers will scramble for new supplies. “By disbarring Russian institutions from raising capital via European banks – which supplied nearly half of Russian investment capital in the past three years – the sanctions could push Russia towards recession as well as raise the risk of default on loans coming due within a year,” writes Nayan Chanda, YaleGlobal’s editor in his column for Businessworld. “It remains to be seen how the shortages and high price affect the patriotic fervour aroused by Vladimir Putin’s Ukrainian adventure.” Russia seeks dominance over its neighbors, Europe expects Russia to end the conflict, and both sides have expressed a readiness to end sanctions. Putin may not have control over the angry separatists in eastern Ukraine, but he could lead by pursuing cooperation with neighboring countries and Europe. – YaleGlobal

The war of sanctions between the West and Russia is the latest threat to the world trade and economy

Globalisation’s death has been announced many times. From the wrecked WTO summit in Seattle in 1999 to the global financial crisis in 2007, when the world trade seized up, the implacable march of globalisation has indeed slowed. But it has bounced back. The war of sanctions between the West and Russia is the latest threat to the world trade and economy, and one that might inflict long-term damage to the global economy. Den Rest des Beitrags lesen »

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Italy and Japan: Troubled Twins of Globalization

Posted by hkarner - 26. August 2014

Date: 26-08-2014
Source: YaleGlobal

Japan and Italy are major economies, ranked third and ninth in the world, respectively. Yet both have slipped in recent years, a result of insular policies that in turn encourage provincialism. The cultures offer beautiful and unusual elements that draw admiration from around the world. Ironically, challenges emerge as each are obsessed with preserving and perfecting traditions. “Japan and Italy are major developed economies that are struggling mightily with the trade-offs between preserving a way of life and adopting reforms – such as inviting foreign workers, promoting free competition and liberalizing labor – that could allow them to succeed in a globalized world,” writes veteran journalist Joji Sakurai who knows both places well. Many citizens are content with the trade-off on productivity to preserve cultural traditions, but must be wary of shackling innovation for individuals or society as a whole. – YaleGlobal

In separate quests for beauty and perfection, Japanese and Italians are lulled into provincial trapt.

ROME: It might seem odd but two inward-looking countries from old Europe and the Pacific, troubled twins with such strong cultures, offer insights into the future of globalization: Italy has campanilismo, or loyalty to the village bell-tower.  The Japanese talk about takotsubo-ka, being caught in the clay pot that traps octopus. Japan is the world’s third largest economy and Italy is ninth – though both have slipped in recent years. Both attract millions of visitors each year and sell their products around the world, yet remain stuck in a mindset that is fundamentally provincial.
Provincialism. Insularity. They may seem like bad words, but any visitor to these countries senses that fierce attachment to culture is part of what make Italy and Japan attractive. Visitors strolling into any village in either country, who ask for the local speciality, are treated to unforgettable delights. Both countries have an astonishing array of living dialects that are nearly incomprehensible to people from other parts of the country.
Provincialism can just be a snooty way of saying cultural vibrancy, but it can also be an economic shackle.
Japan and Italy are major developed economies that are struggling mightily with the trade-offs between preserving a way of life and adopting reforms – such as inviting foreign workers, promoting free competition and liberalizing labor – that could allow them to succeed in a globalized world. Den Rest des Beitrags lesen »

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The Overstretched West

Posted by hkarner - 26. August 2014

Date: 26-08-2014
Source: Project Syndicate


Joschka Fischer was German Foreign Minister and Vice Chancellor from 1998-2005, a term marked by Germany’s strong support for NATO’s intervention in Kosovo in 1999, followed by its opposition to the war in Iraq. Fischer entered electoral politics after participating in the anti-establishment protests of the 1960’s and 1970’s, and played a key role in founding Germany’s Green Party, which he led for almost two decades.

BERLIN – The chaotic consequences of the gradual disintegration of Pax Americana are becoming increasingly clear. For seven decades, the United States safeguarded a global framework, which – however imperfect, and regardless of how many mistakes the superpower made – generally guaranteed a minimum level of stability. At the very least, Pax Americana was an essential component of Western security. But the US is no longer willing or able to be the world’s policeman.

The staggering accumulation of crises and conflicts facing the world today – in Ukraine, Iraq, Syria, Gaza, and Libya – are linked to America’s new stance. Should matters come to a head in another seismic zone of world politics – namely, East Asia – the world would confront a global catastrophe stemming from the synchronicity of numerous regional crises. Obviously, it would be a crisis that no one could control or contain. Den Rest des Beitrags lesen »

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Why globalisation is not reducing inequality within developing countries

Posted by hkarner - 24. August 2014

Date: 22-08-2014
Source: The Economist
Subject: Revisiting Ricardo

DEFENDERS of globalisation often say that, whatever distress it may cause for rich-world workers, it has been good for poor countries. Between 1988 and 2008, global inequality, as measured by the distribution of income between rich and poor countries, has narrowed, according to the World Bank. But within each country, the story is less rosy: globalisation has resulted in widening inequality in many poor places.

This can be seen in the behaviour of the Gini index, a measure of inequality. (If the index is one, a country’s entire income goes to one person; if zero, the spoils are equally divided.) Sub-Saharan Africa saw its Gini index rise by 9% between 1993 and 2008. China’s soared by 34% over 20 years. In few places has it fallen.

Economists are puzzled: the data contradict the predictions of David Ricardo, one of the founding fathers of their discipline. Countries, said Ricardo, export what they are relatively efficient at producing. Take America and Bangladesh now. In America the ratio of highly skilled to low-skilled workers is high. In Bangladesh it is low. So America focuses on products requiring highly skilled labour, such as financial services and software. Bangladesh focuses on downmarket products such as garments. Den Rest des Beitrags lesen »

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New techniques show the damage done by subsidies at the heart of global trade

Posted by hkarner - 10. August 2014

Date: 09-08-2014
Source: The Economist
Subject: Free exchange: Tilted marine

ShipbuildingTHERE is no better symbol of the benefits of globalisation than the container ship. More than 9 billion tonnes of goods and materials were transported by sea in 2012, with trade helping to lift global growth rates. An ever-expanding web of links connects rich and poor; developing countries now account for around 60% of seaborne trade. But ships also show the rotten side of trade: protectionism. In 2006 China enacted a “Long and Medium-Term Plan” to enlarge its shipping industry by 2015. It has been successful (see left-hand chart). New research shows its attempts to tilt markets may be having a bigger impact than previously thought.

Protectionism in shipping is centuries old. In a 1905 study* Royal Meeker, an American economist, explained how a system of subsidies developed under Elizabeth I. Rewards were based on tonnage of ship, and included “bounties” paid to fishing boats heading for the North Sea in search of herring. Adam Smith provided an early economic analysis in “The Wealth of Nations”, lamenting: “It has, I am afraid, been too common for vessels to fit out for the sole purpose of catching, not the fish, but the bounty.” The handouts distorted the shipbuilding industry, resulting in an oversize fishing fleet and a misallocation of resources.

Far from avoiding the distortion Smith spotted, governments have been keen to nurture it. The early logic was military. A strong merchant fleet meant lots of boats that could be commandeered during times of war. One way to bolster shipping has been to grant lucrative contracts for postal delivery: Britain’s Cunard lines benefited hugely from such a deal in the 1830s. Another method, used by both America and Japan in the early 1900s, was easy finance, in the form of cut-price government loans. Den Rest des Beitrags lesen »

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Getting Globalization Right

Posted by hkarner - 17. Juli 2014

Date: 16-07-2014
Source: Project Syndicate


Ian Goldin, Director of the Oxford Martin School at the University of Oxford and Vice-Chair of the Oxford Martin Commission for Future Generations, is the co-author of The Butterfly Defect: How Globalization Creates Systemic Risks, and What to Do about It.

OXFORD – Recent evidence suggests that much of the world has entered a period of low financial-market volatility. But this is no time for complacency; more turbulent times are likely to lie ahead.

Over the last quarter-century, rapid technology-driven globalization – characterized by the physical and virtual integration of the global economy, including the opening of world markets – has contributed to the fastest increase in incomes and population in history. But, while globalization has created unprecedented opportunity, it has also unleashed a new form of systemic risk – one that threatens to devastate political institutions and national economies.

Systemic risk is intrinsic to globalization. Greater openness and integration necessarily increase the potential for cascading crises and amplification of shocks.

As individuals and societies become richer, they come into closer contact with one another – virtually, through communication technologies, and physically, through population growth, urbanization, and travel. Meanwhile, rising consumption of products like food, energy, and medicine enhances the externalities, or spillover effects, of individual choices, with the connectivity of global systems increasing these effects’ range and impact. Den Rest des Beitrags lesen »

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