OECD Member States Research Articles

An Overview on Organization for Economic Co-operation & Development

The Organization for Economic Co-operation and Development (OECD; French: Organization de co-operation ET de development economies, OCDE) is an intergovernmental economic organization with 36 member countries, founded in 1961 to stimulate economic progress and world trade. It is a forum of countries describing themselves as committed to democracy and the market economy, providing a platform to compare policy experiences, seeking answers to common problems, identify good practices and coordinate domestic and international policies of its members. Most OECD members are high-income economies with a very high Human Development Index (HDI) and are regarded as developed countries. As of 2017, the OECD member states collectively comprised 62.2% of global nominal GDP (US$49.6 trillion) and 42.8% of global GDP (Int$54.2 trillion) at purchasing power parity. OECD is an official United Nations observer.

Curriculum re-design in a knowledge-based economy

La globalización y la modernización representan un desafío continuo para muchas sociedades. A medida que las fronteras entre las naciones se vuelven más porosas debido al progreso de la tecnología, la migración y una fuerza laboral más móvil, cada nación debe diseñar una respuesta estratégica para promover el desarrollo del capital humano a fin de seguir siendo económicamente competitivos en el mercado global. Un enfoque que muchos países han explorado es el desarrollo de las economías del conocimiento. Especialmente en los estados miembros de la OCDE, el conocimiento se identifica cada vez más como el habilitador clave de la productividad y el crecimiento económico. Esto ha llevado a una nueva comprensión paradigmática del papel de la información, la tecnología y el aprendizaje en el desempeño económico. Según un informe de la OCDE, “El término economía basada en el conocimiento se deriva de este reconocimiento más completo del lugar que ocupa el conocimiento y la tecnología en las economías modernas de la OCDE” (OCDE, 1996). En consecuencia, las sociedades contemporáneas están muy centradas en el sector de la educación como motor para alcanzar los objetivos nacionales y lograr la competitividad global en las economías del conocimiento.

Government Support of Small and Medium Sized Entrepreneurship in Russia

Support of the small and medium sized entrepreneurship (SME) sector is recognized to be one of Russia’s economic policy priorities. It is customary to speak of that sector’s low level of development compared with other countries. However, when comparable estimates are applied, the gap does not appear to be catastrophic. The relative share of SMEs in the value added produced by Russia’s business sector amounts to about 44 percent, in the developed countries – OECD member states it amounts on average to 55 percent, in the USA – to 48 percent, and in Canada – to 30 percent. The problems faced by Russian SMEs, in qualitative terms, are as follows: the percentage of exporters and technological startups is low, and a greater part of that sector is unregulated; in 2018, the relative share of medium sized firms and the number of technological startups shrank even further.

PERSONAL INCOME TAX: EXPERIENCE OF FOREIGN COUNTRIES

Introduction. In the current conditions of the integration movement of Ukraine to the European Union and the reform of the institutions of state power, the issue of studying foreign experience of the system of taxation of individuals' incomes is actualized. The application of effective practices of other states will contribute to increasing the fiscal role of the personal income tax in Ukraine, reducing social inequality and increasing the welfare of the population. Purpose. The purpose of the article is to find out the features, trends and problems of the functioning of the personal income tax in foreign countries. Results. The article deals with the foreign experience of functioning of the system of personal income taxation. The role and role of PIT in the EU and OECD countries is shown. The proportional and progressive approach to taxation of this tax is considered, their key advantages and disadvantages are determined. An analogy has been made between the European states, the OECD member states and Ukraine. The objective necessity of establishing a non-taxable minimum or partial exemption of citizens' incomes from taxes in the context of support of low-income categories of the population and ensuring social justice is substantiated. Conclusions. It is concluded that in developed countries, the progressive system of taxation of the PIT along with the minimum non-taxable minimum is an effective tool for generating budget revenues and solving social inequalities in society. Instead, third-world states can not use this mechanism in a qualitative way due to significant tax compliance problems. They apply a proportional taxation system for PIT that minimizes tax evasion and international competitiveness.

ТЕНДЕНЦИИ РАЗВИТИЯ ЭКОНОМИЧЕСКИХ ОТНОШЕНИЙ ИЗРАИЛЯ НА БЛИЖНЕМ ВОСТОКЕ

The lack of Russian-language research on the features of the economic development of Israel as an OECD member state underlines the urgent need to identify new trends in the Israeli economy. Not taking into account the existing variety of humanitarian studies, and especially the concentration of studies on the political history of Israel and its modern component, we can recognize a clear lack of work that would cover Israeli economy. Current trends in Israeli trade relations, which have begun to make the mselves clear, require both consideration of effective trade and economic interaction between Israel and Palestine, and identification of the peculiarities of hidden regional trade and economic ties. Israel and Palestine are in close cooperation on the exchange of labor and goods, despite the lack of a political settlement. For Palestine, Israel is a major trading partner, and Palestine plays a key security role for Israel. The second important aspect in covering new trends in the Israeli economy may be the need to study the nascent format of cooperation between Israel and the Middle East. The article explores the specifics of economic relations between Israel and the countries of the Middle East, reveals the growing role of economic relations between Israel and the countries of the region.

Pension funds and stock market development: evidence from OECD countries

Pension funds have experienced considerable expansions in the value of their asset holdings after the gradual global transition from single tier pension system to multi-tiered pension systems, due to public pensions becoming financially unsustainable. Increases in the value of the pension funds' financial asset holdings have enhanced their efficiency in capital markets. This paper investigates the effect of pension funds as an institutional investor on stock market development in 18 OECD member states for the period of 2001-2015 with panel data analysis. The findings suggest that pension funds affected stock market development positively in the long run.

Pension funds and stock market development: evidence from OECD countries

Pension funds have experienced considerable expansions in the value of their asset holdings after the gradual global transition from single tier pension system to multi-tiered pension systems, due to public pensions becoming financially unsustainable. Increases in the value of the pension funds' financial asset holdings have enhanced their efficiency in capital markets. This paper investigates the effect of pension funds as an institutional investor on stock market development in 18 OECD member states for the period of 2001-2015 with panel data analysis. The findings suggest that pension funds affected stock market development positively in the long run.

Building a typology of housing systems to inform policies in OECD and EU member States

[eng] This article establishes a typology of housing systems in OECD and EU countries, using principal component and cluster analysis on housing market context and housing conditions variables from the new OECD Affordable Housing Database (AHD), as well as data on household indebtedness. We identify four groups among a sample of 25 countries, subsequently extended to 32, as countries for which a more limited set of information is available are added to the baseline analysis. A group named “Northern”, as it covers mainly Northern Europe, including Germany, features extended private rental and generally high household debt. A “Western” group, which includes France and the United Kingdom, has higher homeownership rates and more social housing. “Southern-Central” and “Eastern” groups gather European countries, where outright homeownership is prevalent, but housing conditions are poorer. Both the country coverage and the set of variables considered in this article are wider than in most previous studies and findings are broadly consistent with the comparative housing literature for the countries with overlapping coverage.

The New Tie-Breaker-Rule for Companies According BEPS Action Point 6: A (Too) Radical Change?

This article investigates whether the general introduction of a Mutual Agreement Procedure under Article 4 section 3 OECD Model through BEPS Action Point 6 is more capable of effectively and practically breaking the tie for dual resident companies than the former place of effective management criterion. Based on an empirical analysis of the tie-breaker-rule in treaty practice in more than 2,000 Double Tax Conventions concluded by the OECD Member and Partner States it is demonstrated that the place of effective management criterion is still predominant in treaty practice and that the application of a Mutual Agreement Procedure under Article 4 section 3 OECD Model only slightly increased following the MLI implementation process. Furthermore, it is shown that the cautious implementation of the new tie-breaker-rule can be explained due to various procedural shortcomings of the Mutual Agreement Procedure with respect to the core requirements that Article 4 section 3 OECD Model has to fulfil. Based on the empirical and theoretical assessment further suggestions for improvements to enhance the application of both, the MAP and place of effective management criterion, on a standalone basis, are provided. A combined application of both tie-breaker-rules within a two-step hierarchical test is presented as the preferred solution.

Reflections on the Fight against Aggressive Tax Planning (When the Law Is Silent)

Multinational enterprises make use of aggressive tax planning strategies because they are able to operate in the legal vacuum that exists between nation states. The tax burden is not mitigated by falsifying the facts of tax-relevant events (as in the case of tax evasion) or through simulation of certain transactions (as in the case of sham), but through careful use of existing gaps between tax rates. The present article describes the current situation with normative gaps in global taxation and erosion of national governance due to the loss of sovereignty and the extraterritorial application of national law. It is argued that a legal vacuum represents a substantial cost for nation states. To reduce this cost, the current international proposals are considered. The article aims to clarify whether and to what extent the BEPS Project has contributed to redefining the concept of “legal vacuum” in the international tax system. In particular, the question is whether, in order to prevent aggressive tax planning schemes, OECD member states are required to avoid situations of double non-taxation and cases of no or low taxation associated with practices that artificially segregate taxable income from the generating activities.

The Changing Structure of Immigration to the OECD: What Welfare Effects on Member Countries?

We investigate the welfare implications of two pre-crisis immigration waves (1991–2000 and 2001–2010) and of the post-crisis wave (2011–2015) for OECD native citizens. To do so, we develop a general equilibrium model that accounts for the main channels of transmission of immigration shocks – the employment and wage effects, the fiscal effect and the market size effect – and for the interactions between them. We parameterize our model for 20 selected OECD member states. We find that the three waves induce positive effects on the real income of natives; however, the size of these gains varies considerably across countries and across skill groups. In relative terms, the post-crisis wave induces smaller welfare gains compared to the previous ones. This is due to the changing origin mix of immigrants, which translates into lower levels of human capital and smaller fiscal gains. With a few exceptions, differences across cohorts explain a tiny fraction of the highly persistent, cross-country heterogeneity in the economic benefits from immigration.

The Analysis of The Effects of Variables Used in the Formation of PISA Scores on Job Index Values for OECD Member States

The quality of an adult’s daily working life comprising the major part of his life, will also increase the quality of his social life. Having a good working life is also associated with having a job that one desires and regards it as suitable for himself. But as will be acknowledged all over the world, the quality of a job that one can have will be affected in direct proportion to the quality of his education and his ability to meet company’s demands. Starting from this point of view, some of the variables used to obtain PISA scores for the year 2015 were identified for the purpose of the examination of qualified education, and that to which extent they influence the job index variable, included in the OECD Better Life index to represent a decent work, was investigated using ordinal logistic regression analysis.

The Changing Structure of Immigration to the OECD: What Welfare Effects on Member Countries?

We investigate the welfare implications of two pre-crisis immigration waves (1991– 2000 and 2001–2010) and of the post-crisis wave (2011–2015) for OECD native citizens. To do so, we develop a general equilibrium model that accounts for the main channels of transmission of immigration shocks – the employment and wage effects, the fiscal effect, and the market size effect – and for the interactions between them. We parameterize our model for 20 selected OECD member states. We find that the three waves induce positive effects on the real income of natives, however the size of these gains varies considerably across countries and across skill groups. In relative terms, the post-crisis wave induces smaller welfare gains compared to the previous ones. This is due to the changing origin mix of immigrants, which translates into lower levels of human capital and smaller fiscal gains. However, differences across cohorts explain a tiny fraction of the highly persistent, cross-country heterogeneity in the economic benefits from immigration.

Revenue-Raising Potential of Alcohol and Tobacco Excise Duties in Germany and Poland

<p><em>Accumulation of funds to cover government spending is the </em><em>primary purpose</em><em> of </em><em>taxation. According to multiple authors, excise duties are classified as taxes with the highest revenue-raising potential. In the OECD member states, e</em><em>xcise duties constitute a considerable source of state revenue. They account on average for 7.6% of total taxation. The European Union member states apply a harmonized structure for excise duties on selected products. They include, above all, alcoholic beverages and tobacco products. The average share of alcohol and tobacco taxation in GDP and total taxation for EU-28 in 2014 equaled, respectively, 0.8% and 2.2%. Although taxes on alcohol and tobacco are in no small extent harmonized,<strong> </strong>their design may sill vary between member states and strongly affect their collection efficiency. The primary purpose of this article is to</em> <em>compare excise duties imposed on alcohol and tobacco in Germany and Poland. The article is divided into three parts. The first addresses theoretical aspects concerning excise taxation. The second reviews the design of alcohol and tobacco excise duties in Germany and Poland. The third evaluates the revenue-raising potential of these duties in both countries.</em></p>

Zadłużenie gospodarstw domowych a dynamika wydatków konsumpcyjnych w krajach OECD po wybuchu kryzysu finansowego

The paper aims at empirical evaluation of the impact of household debt on the dynamics of consumption spending since the beginning of the global financial crisis. The research employed linear regression analysis of the rate of growth of household spending against the rate of growth of disposable income, the level of indebtedness and long-term interest rates in the OECD member states between 2008-2014. The results obtained indicate that household indebtedness was one of the factors influencing the dynamics of consumption demand and thus the processes of economic growth in the OECD states after the beginning of the global financial crisis. Variations in the relation of total debt to net disposable income and in the level of long-term interest rates were both negatively related to the changes in consumption spending. This impact turned out to be markedly stronger when total household debt of a given country was exceeding 85% of GDP, which is consistent with the results of previous investigations on the in&uence of the indebtedness of household sector on the dynamics of economic growth

Steuer- und wirtschaftspolitische Bedeutung von Patentboxen im Post-BEPS-Zeitalter

Germany is one of the very few developed countries without any R&Drelated tax incentives. However, broad political consensus has decidedthat this should change in the near future. One possible option would be an output oriented measure, i.e. a so called “patent box” regime. This instrument has recently undergone significant conceptual changes due to the agreement of OECD, G20 and EU Member States on the “modified nexus approach”. As a consequence, the patent box has lost much of its appeal as a means to attract IP and IPrelated profits from abroad. We argue that it nevertheless still has a potentially important role to play as a defensive instrument in international tax competition. In this context, aspects of optimal patent box design within the constraints of the nexus approach and EU law are discussed. We furthermore examine the effectiveness of a patent box regime that adheres to the nexus approach in attracting or stimulating additional R&D investments. Our preliminary conclusion is that it would have an impact on discrete investment choices made by mature MNEs, whereas it would be of even lesser relevance for SMEs than traditional patent box designs.

Why do we have lobbying rules? Investigating the introduction of lobbying laws in EU and OECD member states

Why do political systems introduce lobbying rules? Previous literature has analysed the determinants of the introduction of lobbying laws in the US states. However, the last 15 years have witnessed a booming popularity of lobbying laws across the world. Building upon the existing literature, this study seeks to explain the introduction of lobbying laws in EU and OECD member states from 1995 to 2014. The analysis considers variables related to the presence of lobbying scandals, the external promotion by international organizations and corporatism. The causal mechanisms follow the theoretical arguments developed in the literature on political agenda-setting effects, policy diffusion and theories of interest representation. The empirical investigation is based on an original dataset and a statistical investigation using event history analysis and multinomial regression models. The results suggest that policy diffusion variables influence the likelihood of passing lobbying laws. While scandals only affect the presentation of proposals for lobbying regulation in Parliament, corporatism shows no effects on the passage of such laws.

An analysis of the applicability of the OECD Model Tax Convention to non-OECD member countries: The South African case

Most tax treaties (including South Africa's) are based on the OECD Model Tax Convention on Income and Capital and the related Commentary (the 'OECD Model'). Notwithstanding the uncertainty surrounding its legal status, the courts in many countries use the OECD Model in the interpretation of their tax treaties. The OECD launched an action plan on Base Erosion and Profit Shifting ('BEPS') in 2013, which is aimed at improving international tax cooperation between governments. In South Africa, the importance of combating BEPS is highlighted by the fact that the Davis Tax Committee has appointed a sub-committee specifically to address concerns pertaining to BEPS. South Africa's participation in the BEPS project and its tax treaty negotiations with other countries, especially OECD member states, are of the utmost importance to South Africa's National Treasury. Consequently, it is the primary objective of this article to analyse the applicability of the OECD Model to non-OECD member countries, with particular emphasis on South Africa. It will be argued that, if the treaties of non-member countries are in conformity with the OECD Model and no specific position has been taken, the non-members also accept the provisions of the Model and the Commentary as an interpretative aid.

ASSESSMENT OF TAXATION AS A FISCAL POLICY INSTRUMENT

Taxation is one of the instruments the government can actively use to have an effect on the ongoing economic processes, directing their development into the preferred route. Economic development in the world and Europe, as well as domestic issues and the accession to the community of OECD member states have created new challenges for Latvia’s development and for improvement of the national tax policy and the tax system. Latvia’s fiscal policy is not sustainable, because every year is being adjusted, thus causing dissatisfaction of society and slowing down the country's economic development in general.
 
 Aim of the research is to evalute theoretical aspects and practical application of possibilities to use the taxation as a fiscal policy instrument in order to stabilise Latvia’s national economy.
 
 Based on the experience of different countries and scientific research, the theoretical findings on the application of taxes as a fiscal policy instrument were explored, and the essential measures to be implemented in order to make Latvia’s tax system more sustainable and to reduce social inequalities, as well as to advance the economic growth were identified.
 
 The monographic method, logical constructive method, method of analysis, opinion and concept comparison method, as well as statistical data comparison were used in the research.

Economic and technological complexity: A model study of indicators of knowledge-based innovation systems

The Economic Complexity Index (ECI; Hidalgo and Hausmann, 2009) measures the complexity of national economies in terms of product groups. Analogously to ECI, the Patent Complexity Index (PatCI) can be developed on the basis of a matrix of nations versus patent classes. Using linear algebra, the three dimensions—countries, product groups, and patent classes—can be combined into a measure of “Triple Helix” complexity (THCI) including the trilateral interaction terms between knowledge production, wealth generation, and (national) control. THCI can be expected to capture the extent of systems integration between the global dynamics of markets (ECI) and technologies (PatCI) in each national system of innovation. We measure ECI, PatCI, and THCI during the period 2000–2014 for the 34 OECD member states, the BRICS countries, and a group of emerging and affiliated economies (Argentina, Hong Kong, Indonesia, Malaysia, Romania, and Singapore). The three complexity indicators are correlated between themselves; but the correlations with GDP per capita are virtually absent. Of the world's major economies, Japan scores highest on all three indicators, while China has been increasingly successful in combining economic and technological complexity. We could not reproduce the correlation between ECI and average income that has been central to the argument about the fruitfulness of the economic complexity approach.