20th August 2017
Emerging market economies need tax reform packages not just for the revenues to finance budgetary spending, but also to create a level playing field in an increasingly interconnected world, to address incentives for firms to locate in clean "hubs", and to meet distributional objectives. Often, however, such practices accord special preferences to achieve these objectives and, when failing to meet them, create vested interests that block further reforms. The paper outlines the lessons learned from the Chinese reforms in 1993/4 and 2016 -critical to rebalancing for sustainable development. Also, the Mexican reforms of 2013 illustrate how combinations of taxes and non-standard approaches to administration can overcome long-standing opposition to reforms. We conclude by examining the options being developed in research programs for sub-national and local taxation that are critical for local service delivery, access to credit, for involving the private sector, and achieving sustainable and inclusive development.
12th September 2017
The SDGs have reignited interest in investment, particularly in public infrastructure. International financial institutions (IFIs), such as the IMF and World Bank, have issued sensible new "good practice" guidelines. While most are non-controversial, we argue that they are not sufficient to ensure sustainable development. In this paper, the first of two papers that focus on the investment cycle, we address questions on "what" to invest in and "where". We focus on Chile, which meets most of the recommended criteria and is appropriately held up as an example of efficient and transparent management of investment. But, over two decades the economy has become less "complex" and reliant on primary exports with limited utilization of its enormous potential. It suffers also from spatial disparities, inequality, and congestion and pollution in the metropolitan areas. We show how a system of economy-wide shadow prices linked to a sustainable growth strategy, and the creation of new "clean" hubs can help. Although national connectivity is critical, local investments in infrastructure and public services are also critical in making the "hubs" attractive for private investors and sustained employment generation.
27th September 2017
This paper extends a discussion of the investment cycle in another G-24 paper (Ahmad, 2017), in which the questions concerning "what" to invest in and "where" are addressed. This paper examines the "how" of investment for sustainable development, focusing on options for contracting arrangements, such as PPPs, that would help to involve the private sector, manage risks in the presence of asymmetric information, as well as uncertainty about climate change. It also addresses the strengthening of national and local institutions and the possible role of international financial institutions. In discussing the investment options, the paper also updates an earlier G-24 review of the empirical and theoretical literature on involving the private sector involvement in public investments (Ahmad, Bhattacharya, Vinella, and Xiao, G-24 2015).