This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. This paper considers two empirical questions about tax incentives: (1) are incentives used as tools of tax competition and (2) how effective are incentives in attracting investment? To answer these, we prepared a new dataset of tax incentives in over 40 Latin American, Caribbean and African countries for the period 1985-2004. Using spatial econometrics techniques for panel data to answer the first question, we find evidence for strategic interaction in tax holidays, in addition to the well-known competition over the corporate income tax rate. We find no evidence, however, for competition over investment allowances and tax credits. Using dynamic panel data econometrics to answer the second question, we find evidence that lower corporate income tax rates and longer tax holidays are effective in attracting FDI, but not in boosting gross private fixed capital formation or growth. JEL Classification Numbers: H25, H87

MODERNIZATION OF THE FINANCIAL MECHANISM IN THE FIELD OF REGIONAL AGROBUSINESS У статті розглянуто визначення фінансового механізму та досліджено складові фінансового механізму у сфері регіо нального агробізнесу. Визначено, що основними складовими регіонального фінансового механізму аграрних підприємств виступає державна підтримка (державні програми розвитку), кредитування, інвестування та страхування. Досліджено стан фінансування, інвестування та страхування аграрного сектору Херсонської області. Доведено, що значну роль у фінансово му механізмі у сфері регіонального агробізнесу відіграє кредитування, особливо на пільгових умовах. Окреслено ряд про блем, які стають на заваді ефективній реалізації фінансового механізму у сфері регіонального агробізнесу. Головними про блемами є доступність дешевих джерел фінансування, недосконалість системи фінансової підтримки галузі, недостатньо привабливий інвестиційний стан регіону тощо. Виходячи з проблематики, було запропоновано низку напрямів модернізації фінансового механізму функціонування підприємств аграрної сфери, реалізація яких допоможе вийти аграрному бізнесу регіону на новий рівень.

The issue of “business fragmentation” has been relevant in Russia for over ten years. Business striving to ensure competitiveness makes it necessary to look for mechanisms to reduce the tax burden, applying special tax regimes or preferential tax conditions for residents of territories with special economic status. In this paper, the authors analyze the theoretical prerequisites for substantiating the signs of “business fragmentation,” and study the scope of application of “business fragmentation” schemes within the framework of preferential tax conditions for territories with special economic status in the Far East. The basic research methods were content analysis, comparative analysis and synthesis. As a result of the content analysis of judicial practice, the criteria for business fragmentation, confirming the formal division of a business, were substantiated. The authors carried out a comparative analysis of resident companies and identified, based on open data, 159 residents of priority social and economic development areas (PSEDAs) and 625 residents of the Free Port of Vladivostok (FPV) with signs of “business fragmentation.” Those amounted to 28.49 % and 29.48 % in the total number of active residents, respectively. Vladivostok is the leader in terms of the number of residents with signs of “business fragmentation,” with 443 residents of the FPV. The most common signs of “business fragmentation” among resident companies in territories with a special economic status of the Far East are substantiated: common persons managing companies, common or identical type of activity, and common address of location. Common types of activity among resident companies with signs of “business fragmentation” within territories with special economic status of the Far East are warehousing and auxiliary transport (15 % of PSEDA; 12.3 % of the FPV); construction of buildings (16.5 % of the FPV); and operations with real estate (14 % of the FPV).

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The article presents a study of the social risks of the state in special economic, legal, and organizational regimes using the example of territories with a special economic status in the Russian Far East. An important condition for the creation of special territories for the state is the compensation for the provided preferences in full with benefits in the future. The article contains a content analysis of foreign and domestic literature, based on which the social risks of the state are identified taking into account the specificity of the special territories of the Far East. The authors compile a map of social risks based on the main goals of the creation and development of special territories, and highlight a separate classification feature of the state’s social risks – the non-fulfillment of guarantees for the population. The authors also reveal the problems of justifying indicators for assessing risks. Based on the grouping, analysis and comparison of the official statistical information of Rosstat and the RF Ministry of Economic Development, the authors assess the identified social risks of the state in the Russian Far East territories with a special economic status. The article defines the probability and hazard category of each risk.