The blurring of corporate investor nationality and complex ownership

Alabrese, Eleonora; Casella, Bruno

doi:10.18356/d416e37d-en

Cited by 4 publications

(7 citation statements)

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“…At the same time, outward FDIs from Luxembourg are of similar size, suggesting Luxembourg is only a transit for the investments. For an in‐depth explanation of the organizational structures allowing these flows, Alabrese and Casella (2020) divide MNEs into four categories and discuss their relevance together with practical challenges for policy makers.…”

Section: Methodologies and Findingsmentioning

confidence: 99%

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Illicit financial flows and developing countries: A review of methods and evidence

Brandt

2022

Journal of Economic Surveys

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Illicit financial flows (IFFs) constitute a major challenge for development in low‐income countries, as domestic resource mobilization is imperative for providing crucial public services. The current paper focuses exclusively on the economic dimension of IFFs, thereby excluding topics as drugs trade, money laundering, and human trafficking. While several methods offer to measure the magnitude of IFFs, each has its benefits and drawbacks. Critically, methods based on the balance of payments identity may capture licit as well as illicit flows, and a method based on macroeconomic trade discrepancies suffers from doubtful assumptions. The most convincing estimate to date demonstrates that individuals hold financial assets worth around 10% of global GDP in tax havens. Evidence further indicates that developing countries are more exposed to individuals and multinational enterprises illicitly transferring money out of the country.

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Section: Methodologies and Findingsmentioning

confidence: 99%

“…For an in-depth explanation of the organizational structures allowing these flows, Alabrese and Casella (2020) divide MNEs into four categories and discuss their relevance together with practical challenges for policy makers.…”

Section: 18mentioning

confidence: 99%

Illicit financial flows and developing countries: A review of methods and evidence

Brandt

2022

Journal of Economic Surveys

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“…Leino and Ali‐Yrkkö ( 2014 ) show that inward FDI to Finland largely 8 consists of pass‐through capital without real economic links to the Finnish economy. Alabrese and Casella ( 2020 ) estimate that direct and ultimate shareholders of more than 40% of foreign affiliates worldwide are located in different jurisdictions. However, macro evidence is missing.…”

Section: Literature Reviewmentioning

confidence: 99%

Tax effects on foreign direct investment—Just a rerouting

Erokhin

2023

World Economy

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This paper investigates tax‐related determinants of indirect foreign direct investment (FDI). In particular, it studies the effects of bilateral effective average tax rates, the strength of anti‐tax avoidance rules in host countries and tax haven status of home countries on the volume of indirect FDI host countries receive. The paper uses the fourth edition of the OECD Benchmark Definition of Foreign Direct Investment (BMD4) database, which distinguishes between ultimate and immediate FDI. Methodologically, the paper relies on the standard gravity equation for FDI and applies the Poisson pseudo‐maximum likelihood estimation model. The paper shows that ultimate FDI is not influenced by tax‐related factors but only real economic determinants, whereas tax rates affect immediate FDI. This finding suggests that previous research may have overestimated the tax elasticity of FDI, and taxes do not have an impact on location decisions of FDI, but rather the route of investing—direct or indirect. The paper defines indirect FDI as the difference between ultimate and immediate FDI and finds that high bilateral effective average tax rates encourage indirect FDI. The finding is robust under different specifications.

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“…His analysis points out that for policymaking, governments want to know which company and country of origin is ultimately driving flows of exports, flows of funds and transfer of technology. This thinking was extended in Alabrese and Casella (2020), in which the authors investigated foreign affiliates of multinational firms and found that several types of multiple-country ownership chains exist, from conduit FDI to round-tripping from home to host country and back, to using home or host country as a base for multinational expansion. Each of these analyses focused on the ultimate ownership of foreign affiliates, so that government policymakers in these affiliate countries could understand where the decision-making buck stops in those affiliates.…”

Section: Owners Of Fdimentioning

confidence: 99%

Who owns international business?

2021

Transnational Corporations

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International business in the past century has largely been the domain of large multinational enterprises and banks, as well as small exporting and importing companies. The scope of international business activity has grown in recent years, and today there are many State-owned companies involved in international business activities, as well as financial investors rather than only industrial or commercial companies undertaking foreign direct investment (FDI). Government policy toward international business has largely been supportive since the 1990s, while concerns have arisen particularly in regard to the activities of State-owned enterprises and also the activities of non-traditional investors such as investment funds. To achieve the greatest benefits from FDI and trade, governments need to understand which companies are making the key decisions in global value chains and to collaborate in rule-setting and in guiding companies to pursue desirable activities and to limit non-business goal-seeking.

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The blurring of corporate investor nationality and complex ownership

Cited by 4 publications

References 0 publications

Illicit financial flows and developing countries: A review of methods and evidence

Illicit financial flows and developing countries: A review of methods and evidence

Tax effects on foreign direct investment—Just a rerouting

Who owns international business?

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