Development Finance Institutions (DFIs) exist to promote development by investing in the poorest, least developed countries. They often route those investments via holding companies or private equity funds domiciled in tax havens. On the face of it, that seems absurd: tax havens are widely seen as a drain on development, depriving cash-strapped governments of billions of dollars in public revenue. In a new paper I argue that whilst widespread opposition to DFIs investing via tax havens is understandable, it is misguided. Banning the use of tax havens would do more harm than good.
CGD Policy Blogs
During the recent IMF and World Bank meetings, all eyes were on China. As the US administration contemplates scaling back its global economic engagement, China is doing the exact opposite. But there is increasing attention being paid to risks associated with Chinese financing on two fronts.
There are arguments for and against “spending through the tax system.” On one hand tax incentives are relatively easy to implement; they don’t require an outlay of cash and they make use of information that revenue agencies already collect. But on the other, loading the tax system with too many policy objectives conflicts with the drive for a coherent, simple, transparent tax system. Despite decades of advice from international organisations to curtail tax incentives, they remain a popular tool for governments.
In April this year, the National Academies of Science, Engineering, and Medicine (NASEM) published a report making the case for “Integrating Clinical Research into Epidemic Response.” As reflected in its title, the 250-page-plus-appendices report makes a strong evidence-informed argument for integrating health service delivery with clinical research conducted during epidemics. The goal is to produce critical information on the efficacy and safety of potential therapeutics and vaccines for tackling such epidemics after they occur, or, better still, for preventing them from happening. Earlier this week, the group reconvened at the Wellcome Trust to discuss “what next.” The need to focus on systematic support and funding for the data collection and research functions in outbreak-affected countries came out again as the top priority.
OPIC recently announced it will invest $2 million in a Development Impact Bond (DIB) aimed at improving the availability and quality of cataract surgery services in Cameroon.
One form of soft power is concrete enough. That is, it’s literally concrete. And by a measure of bricks and mortar, it’s clear that the United States is rapidly losing the soft power game to China. In fact, the contrast between the two countries on display this week in Washington is startling.
In 2014, Mark Lowcock, then head of the UK’s Department for International Development, pulled off an unexpected coup: securing an agreement between donor governments on new rules for counting official loans as aid. Some neat diplomatic footwork is needed again now, because negotiations over extending this agreement to donors’ investments in the private sector are threatening to fall apart. Among the consequences could be that the UK walks away from using internationally agreed standards for measuring aid and starts to create its own statistics. Other countries may follow.