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This paper analyzes the extent to which the degree of international economic integration, both financial and trade, affects corporate tax rates. It explores this issue in the context of strategic behavior by countries, taking into account other global and domestic political economy factors. Tax rates are analyzed using a unique tax dataset for advanced and developing economies extending over five decades. We report a number of novel results: there is no general negative relationship between financial globalization and corporate tax rates and revenues - results vary according to country grouping with OECD countries showing a positive relationship; the United States exhibits a “Stackelberg” type of leadership on other countries; trade integration is inversely correlated with tax rates; and public sentiment and ideology affect tax rates. The policy implications of these findings, particularly given budgetary pressures in the aftermath of the global crisis, are noted.

This paper discusses the Europe Agreements, implicit trade preferences given to the Central and East European countries (CEECs) and their impact on European Community (EC) members. As expected, South European countries compete in the same range of products and in a more similar quality market with the CEECs than do other EC countries. A significant part of this trade is explained by outward-processing trade (OPT) of clothing, however. EC firms increasingly move the labour-intensive stages of production to the CEECs. OPT competes in a different quality market than `direct' trade. Up to 1993, trade policy favoured outward processing and was against `direct' trade and foreign direct investment. We draw some lessons from a similar experience in Portugal regarding OPT movements, foreign direct investment and effects of trade policy changes. During the CEECs' transition period, the policy bias will be eliminated. EC firms may go on processing products in the CEECs or may move elsewhere. The competitive pressures on South European countries will not change with further trade liberalization towards the CEECs because those pressures are unlikely to depend on OPT location. New OPT legislation designed to keep employment in the EC may have distributive effects among EC countries, however. The CEECs are the most likely to suffer from the proposed legislation if it is strictly applied.

The aim is to determine whether there is a correlation between trade and investment flows and their inter-causality on a group of Western Balkan countries (Croatia, Bosnia and Herzegovina, FYRoM and Serbia). The analysis in static model resulted in establishing complementarities between FDI inflows and exports and FDI inflows and imports into the countries of the region, which indicates that FDI inflows in this region are efficiency- seeking. Dynamic models have confirmed the traditional variables important for exports and imports (GDP host and home countries, distance, and lagged variables), but there were no links between trade and FDI. The relationship and intensity between trade and FDI is very weak which indicates that the current structure of FDI has not given the desired results in these countries.

In the run up to the global crisis, countries in Central Eastern and Southeastern Europe attracted large capital inflows and some of them built up large external imbalances. This paper investigates whether these imbalances are linked to the sectoral composition of FDI. It shows that FDI in the tradable sectors leads to an improvement of the external balance. We also find that the countries with large market size, good infrastructure, greater trade integration, and educated labor force are more likely to receive more FDI in the tradable sectors.

The government of Cameroon adopted its first Poverty Reduction Strategy Paper (PRSP) to define the overall framework for its development policies. To adjust the overall objectives and address the weaknesses of the first PRSP, a new comprehensive framework, Cameroon's Strategy for Growth and Employment (DSCE), was adopted that focuses mainly on infrastructure and rural development. The DSCE aims to strengthen the macroeconomic framework, the link between DSCE, MTEF, and the annual budgets, and the implementation of governance and anticorruption programs, and also to ensure adequate resources for structural reforms.

The Southern African Customs Union (SACU), the oldest customs union in the world, comprises Botswana, Lesotho, Namibia, Swaziland (known as the BLNS countries), and South Africa. This Selected Issues paper analyzes how policy has responded to the positive SACU revenue shock. It discusses the background and structure of SACU, and examines the fiscal responses of the BLNS countries to the SACU revenue surge. The paper also discusses useful international experience and a framework for fiscal response in these countries.

International trade theory suggests that advanced trade integration may lead to a higher level of intra-industry trade. The enlargement of the European Union (EU) during the last decade is a good example to analyse the intra-industry trade in wine products. The aim of the paper is to analyse the pattern and drivers of horizontal intra-industry trade in the wine sector within the EU between 2000 and 2011. We employ an empirical strategy developed by Cieślik (2005) to test Helpman and Krugman (1985) model. We find a growing trend in intra-industry trade with dominance of vertical intra-industry trade. Estimations suggest that Belgium, France, the Netherlands and Germany report the highest level of intra-industry trade within the EU. The level of intra-industry trade is highest among old member states. Empirical evidence indicates that the standard intra-industry theory finds some support in our data when we control for the sum of capital to labour ratios in the estimated equations instead of relative country-size variables. We find that the EU enlargement positively influences total and vertical intra-industry trade while it has negative impacts on horizontal intra-industry trade. Distance has negative effects on all types of intra-industry trade.

The central and eastern European countries (CEECs) have gone through a dramatic process of industrial restructuring in which the Europe Agreements have played a major role. Using detailed statistics, we analyse the transformation of CEECs’ export structures and whether it led to structural convergence with the remaining EU members. We also analyse structural transformation within sectors in terms of quality ranges. The results show that, in general terms, CEECs have converged both at interand intra-sectoral levels towards pre-existing European Union (EU) members. We discuss whether further restructuring and relocation of CEECs’ industrial patterns are probable in the aftermath of EU membership. info:eu-repo/semantics/publishedVersion