DOCSLIB.ORG

Impact of Corporate Governacne & Subsidiary Locations on Tax Haven Utilization of Developed World Multinational Enterprises

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Impact of Corporate Governacne & Subsidiary Locations on Tax Haven Utilization of Developed World Multinational Enterprises Some pages of this thesis may have been removed for copyright restrictions. If you have discovered material in Aston Research Explorer which is unlawful e.g. breaches copyright, (either yours or that of a third party) or any other law, including but not limited to those relating to patent, trademark, confidentiality, data protection, obscenity, defamation, libel, then please read our Takedown policy and contact the service immediately ([email protected]) Impact of Subsidiary Locations & Corporate Governance on Tax Haven Utilization Evidence from Developed World Multinational Enterprises Ali Ahmed Doctor of Philosophy ASTON UNIVERSITY September 2019 ©Ali Ahmed, 2019 Ali asserts his moral right to be identified as the author of this thesis This copy of the thesis has been supplied on condition that anyone who consults it is understood to recognise that its copyright belongs to its author and that no quotation from the thesis and no information derived from it may be published without appropriate permission or acknowledgement. 1 2 Aston University Impact of Subsidiary Locations & Corporate Governance on Tax Haven Utilization Evidence from Developed World Multinational Enterprises Ali Ahmed Doctor of Philosophy 2019 THESIS SUMMARY The objective of this thesis is to provide an empirical contribution to tax haven literature and improve the understanding of firm behaviour relating to tax haven utilization. The thesis sets out to explore 1) the understudied relationship between corporate governance and tax haven utilization and 2) the hitherto unexplained relationship between subsidiary locations of a Multinational Enterprise and tax haven utilization. This work reviews corporate governance and tax avoidance literature and synthesizes a theoretical bridge to explain tax haven utilization as a function of corporate governance. Two key variables are identified, ownership concentration and women members of the Board of Directors. Empirical results show negative effect of both measures on the likelihood of a firm to own tax haven subsidiaries, confirming the author’s predictions. Secondly, the thesis provides rationale for investigating subsidiary locations and tax haven utilization. The empirical results point to a strong relationship between the two, with evidence suggesting a role of unrecorded capital flight in the relationship. In the larger picture, the findings could point to wealth extraction by Developed world multinational enterprises from developing world, often vulnerable, countries. Keywords: Tax Havens, Capital Flight, Corporate Governance, Ownership Concentration, Women on Board of Directors 3 I dedicate this thesis to my parents 4 Acknowledgements This thesis would not have been possible without my parents, whose support and belief in me set me on this path and my siblings who stayed with them, allowing me to pursue this project so far away from home with my mind at ease. I would like to acknowledge the support I received from Aston University, the Aston Business School, the Research Degrees Programme, the Dean’s Scholarship program and all the staff involved. My supervisors Dr Yama Temouri & Professor Chris Jones who were always helpful, believed in my ideas, offered encouragement and enabled me to navigate the PhD with relative ease. Their input and guidance, along with that of Dr Tomasz Mickiewicz, helped shape my work into one of a good enough standard and was instructive in drawing up the final thesis. I would also like to acknowledge colleagues like Dr Diya, Dr Monty, Dr (to be) Uzzy and everyone else on the 11th floor, for providing welcome relief from work as well as a sense of community in this journey. Lastly, I would thank my wife Hajra for her support, belief and words of encouragement during the final, often trying, days of this project. 5 Contents List of Tables ............................................................................................................................................... 8 List of Figures ................................................................................................................................................ 9 List of Abbreviations ................................................................................................................................... 10 Chapter 1: Introduction .............................................................................................................................. 13 Chapter 2: Tax & tax havens ....................................................................................................................... 19 2.1 Tax competition ................................................................................................................................ 19 2.2 Tax avoidance versus tax evasion ..................................................................................................... 22 2.3 Transfer Pricing & the Arm’s Length Standard. ............................................................................... 25 2.3.1 Intangible asset location: ............................................................................................................ 30 2.3.2 International Debt Shifting ......................................................................................................... 30 2.3.3 Corporate Inversions .................................................................................................................. 31 2.4 Classifying tax havens ...................................................................................................................... 32 2.4.1 Dot Tax Havens ......................................................................................................................... 34 2.4.2 Switzerland ................................................................................................................................ 35 2.4.3. Ireland ....................................................................................................................................... 36 2.4.4 Luxembourg ............................................................................................................................... 38 2.4.5 Tax Haven; Defining a variable ................................................................................................. 41 2.5 Determinants and impact of tax havens ............................................................................................ 43 2.5.1 The impact of tax havens ........................................................................................................... 46 Chapter 3: Corporate governance and tax havens ..................................................................................... 49 3.1 Introduction ....................................................................................................................................... 50 3.2 Agency Theory and Tax Havens ....................................................................................................... 53 3.2.1 Compensation, Incentives and Alignment of Interests .............................................................. 55 3.2.2 Institutional ownership ............................................................................................................... 59 3.2.3 Ownership concentration ........................................................................................................... 60 3.3 Stakeholder Theory and Tax Havens ................................................................................................ 62 3.3.1 Board of Directors ...................................................................................................................... 64 3.3.2 Gender diversity ......................................................................................................................... 65 3.4.1 Variable of Interest: Ownership Concentration ......................................................................... 72 6 3.4.2 Variable of Interest: Appointment of female members of the board of directors ...................... 75 3.4.2 Explanatory Variables: ............................................................................................................... 76 3.4.3 Model ......................................................................................................................................... 77 3.5 Results ............................................................................................................................................... 78 3.6. Conclusion, Limitations and Future Research Avenues .................................................................. 84 Chapter 4: Complementarity between capital flight and tax haven utilization.......................................... 88 4.1 Introduction ....................................................................................................................................... 88 4.2 Literature Gap and Motivation .......................................................................................................... 91 4.3 Conceptual Framework and Hypotheses ........................................................................................... 96 4.4 Data & Methodology ...................................................................................................................... 106 4.4.1 Dependent Variable: Defining tax havens ............................................................................... 107 4.4.2 Explanatory
Load more

Recommended publications
  • Water Wars in Ireland
    new masses: ireland and armenia In this number, nlr’s ‘New Masses, New Media’ series examines the character of the recent protests in Armenia and Ireland, both sparked by price hikes for basic goods: electricity in one case, water in the other. Comparable in population—4.5m and 3m, respectively—Ireland as a whole is three times the size of Armenia. Historically, both have been shaped by their location between two imperial powers: Britain and America, Turkey and Russia. If there is an eerie parallel in the numbers estimated to have perished in the Irish Famine and the Armenian Genocide—between 800,000 and a million—the deliberately exterminationist policies of the Young Turks are of a different order of political and moral malignity to the laissez-faire arrogance of English colonialism. A mark of these dark pasts, in both cases the diaspora significantly outweighs the domestic population. In recent times, both countries have figured on the margin of larger economic unions, the eu and cis; as a result, their trajectories in the 1990s were diametrically opposed. Armenia had been a high-end industrial hub within the Soviet Union, specializing in machine goods and electronic products. Already hit by the 1988 earthquake, its economy suffered one of the sharpest contractions of the former ussr as industrial disruption was exacerbated by war and blockade. From $2.25bn in 1990, Armenian gdp dropped to $1.2bn in 1993; it did not recover to its Soviet-era level until 2002. By that time, the population had fallen by 15 per cent, from 3.54m in 1990 to barely 3m; by 2013 it was down to 2.97m.
    [Show full text]
  • FINANCE Offshore Finance.Pdf
    This page intentionally left blank OFFSHORE FINANCE It is estimated that up to 60 per cent of the world’s money may be located oVshore, where half of all financial transactions are said to take place. Meanwhile, there is a perception that secrecy about oVshore is encouraged to obfuscate tax evasion and money laundering. Depending upon the criteria used to identify them, there are between forty and eighty oVshore finance centres spread around the world. The tax rules that apply in these jurisdictions are determined by the jurisdictions themselves and often are more benign than comparative rules that apply in the larger financial centres globally. This gives rise to potential for the development of tax mitigation strategies. McCann provides a detailed analysis of the global oVshore environment, outlining the extent of the information available and how that information might be used in assessing the quality of individual jurisdictions, as well as examining whether some of the perceptions about ‘OVshore’ are valid. He analyses the ongoing work of what have become known as the ‘standard setters’ – including the Financial Stability Forum, the Financial Action Task Force, the International Monetary Fund, the World Bank and the Organization for Economic Co-operation and Development. The book also oVers some suggestions as to what the future might hold for oVshore finance. HILTON Mc CANN was the Acting Chief Executive of the Financial Services Commission, Mauritius. He has held senior positions in the respective regulatory authorities in the Isle of Man, Malta and Mauritius. Having trained as a banker, he began his regulatory career supervising banks in the Isle of Man.
    [Show full text]
  • Where's the Harm in Tax Competition?
    View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by University of Limerick Institutional Repository Final Author’s Draft, submitted to Critical Perspectives on Accounting, published in 2005 Where’s the harm in tax competition? Lessons from US multinationals in Ireland Sheila Killian Kemmy Business School, University of Limerick, Ireland Abstract The term “harmful tax competition” has become endemic. It is taken as a tautology that competition among nations for the favors of multinational companies, using their tax systems as bait, is harmful. This is a view held even by those who believe competition to be an inherently good thing in most other areas of business. However, the nature of the harm is rarely analyzed, nor are the parties most harmed identified. This paper attempts to redress the balance. Using the case of technology-based US multinationals located in Ireland, it analyses the benefits and hazards to major stakeholders of tax rules that encourage multinationals to locate part of their operation offshore. I argue that tax competition, even that not considered harmful by the OECD, can damage not only the home country of the emigrating multinational, but also the host country gaining the investment, local communities and the environment. © 2005 Published by Elsevier Ltd. Keywords: Tax competition; Multinational; Double tax treaty; Stakeholders; Nation state; OECD; Ireland; Tax haven; Transfer pricing; Power 1. Introduction Shackelford and Shevlin (2001) , in a comprehensive review of empirical tax research in accounting, reduced the literature so far to three questions: Do taxes matter? If not, why not? If so, how much? The first question is critical.
    [Show full text]
  • 1 UNIVERSITY of ESSEX DISSERTATION SCHOOL of LAW LLM/MA IN: International Commercial and Business Law STUDENT's NAME
    UNIVERSITY OF ESSEX DISSERTATION SCHOOL OF LAW LLM/MA IN: International Commercial and Business Law STUDENT’S NAME: Despoina Sofokleous SUPERVISORS’S NAME: Dr Marios Koutsias DISSERTATION TITLE Transnational groups and tax avoidance: Is the relevant law in the U.K., USA and in the EU in need of reform? The cases of Google and Apple COMMENTS: (PLEASE WRITE BELOW YOUR COMMENTS) MARK: SIGNATURE: DATE: 1 UNIVERSITY OF ESSEX SCHOOL OF LAW LLM in International Commercial and Business Law 2018-2019 Supervisor: Dr Marios Koutsias DISSERTATION Transnational groups and tax avoidance: Is the relevant law in the U.K., USA and in the EU in need of reform? The cases of Google and Apple Name: Despoina Sofokleous Registration Number (optional): 1807630 Number of Words: 15217 Date Submitted: 11/9/2019 2 TABLE OF CONTENTS ABSTRACT .................................................................................................................................................. 4 INTRODUCTION ........................................................................................................................................ 5 CHAPTER 1: THE CONCEPT OF TAX AND TAX AVOIDANCE ........................................................................ 6 THE CONCEPT OF TAX .................................................................................................................................. 6 Purpose of Tax ........................................................................................................................................ 8 THE CONCEPT
    [Show full text]
  • Dáil Éireann
    Vol. 973 Tuesday, No. 2 9 October 2018 DÍOSPÓIREACHTAÍ PARLAIMINTE PARLIAMENTARY DEBATES DÁIL ÉIREANN TUAIRISC OIFIGIÚIL—Neamhcheartaithe (OFFICIAL REPORT—Unrevised) Insert Date Here 09/10/2018A00050Financial Resolutions 2019 � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 108 09/10/2018A00100Budget Statement 2019 � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 108 09/10/2018EEE00100Business of Dáil� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 220 09/10/2018EEE00300Allocation of Time: Motion � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 220 09/10/2018EEE00600Financial Resolutions 2019 � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 221 09/10/2018EEE00700Financial Resolution No� 1: Tobacco Products Tax� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 221 09/10/2018NNN00300Financial Resolution No� 3: Value-Added Tax� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 238 09/10/2018SSS00100Financial Resolution No� 4: General � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 249 DÁIL ÉIREANN Dé Máirt, 9 Deireadh Fómhair 2018 Tuesday, 9 October 2018 Chuaigh an Ceann Comhairle i gceannas ar 1 p�m� Paidir.
    [Show full text]
  • Christmas 2019
    Christmas 2019 ECONOMIC OUTLOOK Dr. Constantin Gurdgiev 7 STEPS FOR EMPLOYERS TO STAY ONSIDE WITH THE LAW 3 WAYS TO MOTIVATE YOUR TEAM- WITHOUT STRESSING THEM OUT HOW TO CULTIVATE GRATITUDE, COMPASSION, AND PRIDE ON YOUR TEAM HOW TO STOP OVERTHINKING EVERYTHING 9 THINGS TO DO BEFORE YOU GO TO BED TABLE OF CONTENTS 3 Economic Outlook - Dr. Constantin Gurdgiev 6 3 ways to motivate your team- without stressing them out 9 7 steps for employers to stay onside with the law 12 How to cultivate gratitude, compassion, and pride on your team 14 How to stop overthinking everything 16 9 things to do before you go to bed 18 Business Briefs 19 Meet the team 20 Range of services WELCOME to the Christmas 2019 edition of our newsletter. As always this issue contains a variety of articles which we hope will be of interest to you and your business. If you have any queries please do not hesitate to contact us and one of our highly experienced team will be happy to assist you. Denis Lane & Gary Buchan. Dr. Constantin Gurdgiev THETHE VALUEVALUE OFOF HISTORYHISTORY ANDAND THETHE SHIFTINGSHIFTING WINDSWINDS OFOF PUBLICPUBLIC POLICYPOLICY The philosopher George The writing is on the wall for Ireland: a decade after the end of the Global Financial Crisis, our economy is now back at that pivotal, similar to the 2005-2006, juncture Santayana said that “Those from which further accumulation of policy and regulatory errors will be pushing us to the point of no return. who cannot remember the In recent weeks, the news flow from Ireland has been less than gentle to investors past are condemned to repeat looking for a long-term value in macroeconomic terms.
    [Show full text]
  • Sins of the Father by Conor Mc Cabe
    Sins of the Father 8693 Sins.indd 1 21/04/2011 12:27 8693 Sins.indd 2 21/04/2011 12:27 Sins of the Father TRACING THE DECISIONS THAT SHAPED THE IRISH ECONOMY Conor MCCabe 8693 Sins.indd 3 21/04/2011 12:27 First published 2011 The History Press Ireland 119 Lower Baggot Street Dublin 2 Ireland www.thehistorypress.ie © Conor McCabe, 2011 The right of Conor McCabe to be identified as the Author of this work has been asserted in accordance with the Copyrights, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without the permission in writing from the Publishers. British Library Cataloguing in Publication Data. A catalogue record for this book is available from the British Library. isbn 978 1 84588 693 6 Typesetting and origination by The History Press Printed in Great Britain 8693 Sins.indd 4 21/04/2011 12:27 Contents Acknowledgements 7 Introduction 9 1 Housing 13 2 Agriculture 57 3 Industry 87 4 Finance 125 5 From Bank Guarantee to Bailout 153 Conclusion 191 Notes 197 Bibliography 211 Index 217 8693 Sins.indd 5 21/04/2011 12:27 8693 Sins.indd 6 21/04/2011 12:27 Acknowledgements Special thanks to: Donagh Brennan; my nephews Kevin and Jack Cleary; John Cleary; Ronan Colgan and the staff at History Press Ireland; Rudi Deda; Ciarán Finnegan; Daithí Flynn; Colm Hall; Dr.
    [Show full text]
  • Dáil Éireann
    Vol. 892 Wednesday, No. 1 7 October 2015 DÍOSPÓIREACHTAÍ PARLAIMINTE PARLIAMENTARY DEBATES DÁIL ÉIREANN TUAIRISC OIFIGIÚIL—Neamhcheartaithe (OFFICIAL REPORT—Unrevised) Insert Date Here 07/10/2015A00100Ceisteanna - Questions � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 2 07/10/2015A00200Priority Questions� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 2 07/10/2015A00250GLAS Administration � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 2 07/10/2015B00650Milk Quota � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 5 07/10/2015C00750Inshore Fisheries � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 7 07/10/2015D00400Agriculture Scheme Payments � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 9 07/10/2015E02050Beef Data Programme � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 12 07/10/2015F00200Other Questions � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 15 07/10/2015F00300GLAS Administration � � � � � � � � � � � � � � � � � � � � � �
    [Show full text]
  • The Ills of Blacklisting for International Taxation
    The Ills of Blacklisting for International Taxation Kluwer International Tax Blog September 20, 2018 Lucas de Lima Carvalho (Brazilian Institute for Tax Law (IBDT)) Please refer to this post as: Lucas de Lima Carvalho, ‘The Ills of Blacklisting for International Taxation’, Kluwer International Tax Blog, September 20 2018, http://kluwertaxblog.com/2018/09/20/ills-blacklisting-international-taxation/ The idea for this article came to me after I read a piece published by the International Tax Review with the title “Mexico confirms that US may qualify as a preferential tax regime in light of the 2017 Tax Cuts and Jobs Act”.[1] Instead of curating a proper blacklist, or a published list of tax havens and preferential tax regimes, Mexico opted in 2008 for an “effective tax rate standard” to be applied by the taxpayers in assessing whether a foreign regime is blacklisted or not. Since the standard is 75% of the corporate income tax rate in Mexico (30%), given that the TCJA reduced the U.S. corporate income tax rate to 21%, 21% is lower than 22.5%, and, therefore, the U.S. may have entered the Mexican blacklist. In reading about the Mexican way of blacklisting, I can only imagine what Brazilian taxpayers – and tax practitioners – would feel about our “official list standard” being replaced by an “effective tax rate standard” in the near future. Brazilian Law does make reference to a minimal tax rate in its blacklisting rules (and, for simplicity in this article, I have merged the concepts of blacklisting and graylisting in Brazilian Law – the former for tax havens, the latter for preferential tax regimes), but that minimal tax rate is not based on a percentage of the applicable Brazilian corporate income tax rate (the minimal tax rate is currently set at 17% by Article 1st of Ordinance MF 488/2014).
    [Show full text]
  • Home Country Determinants of Outward Foreign Direct Investment: from Which Countries Does the Republic of Ireland Attract Foreign Direct Investment?
    Home Country Determinants of Outward Foreign Direct Investment: From which countries does the Republic of Ireland attract Foreign Direct Investment? BACHELOR THESIS THESIS WITHIN: Economics NUMBER OF CREDITS: 15 ECTS PROGRAMME OF STUDY: International Economics AUTHOR: Mark Stribling & Ville Viinikainen JÖNKÖPING May 2021 Bachelor Thesis in Economics Title: Home Country Determinants of Outward Foreign Direct Investment: From which countries does the Republic of Ireland attract Foreign Direct Investment? Authors: Mark Stribling and Ville Viinikainen Tutor: Andrea Schneider, PhD Date: 2021-05-24 Key terms: Foreign Direct Investment, Home Country Determinants, Macroeconomic Factors, Market Size, Corporate Tax Abstract The flow of foreign direct investment (FDI) into a country can benefit both the investing entity (the home country) and the host country. The determinants of FDI are a highly discussed topic, with various determinants being analysed and discussed over time. Multiple research papers focus on the determinants of the host country, which try to identify the most important factors that make countries attractive to investment from abroad. This paper aims to shed light on the home country determinants and their relationship with investments into the Republic of Ireland. Using panel data analysis for 28 different countries around the world from the years 2012 to 2019, this paper aims to find relationships between different home country related variables and FDI flows into the Republic of Ireland. We find evidence that FDI is positively associated with the market size of the home country, the corporate tax rate difference between the home and the host country and sharing an official language. On the other hand, population and distance were found to be negatively associated with FDI.
    [Show full text]
  • What Makes a Country a Tax Haven? an Assessment of International Standards Shows Why Ireland Is Not a Tax Haven
    05 Tobin PP article_ESRI Vol 44-3 20/09/2013 10:15 Page 401 The Economic and Social Review, Vol. 44, No. 3, Autumn, 2013, pp. 401–424 POLICY PAPER What Makes a Country a Tax Haven? An Assessment of International Standards Shows Why Ireland Is Not a Tax Haven GARY TOBIN* Department of Finance, Dublin KEITH WALSH** Office of the Revenue Commissioners, Dublin Abstract: This paper explores the issue of tax havens and tax competition. The recent intensified debate on tax havens is summarised, as is the important work of the OECD, the EU and the G-20 in this area and the ongoing research on the economic effects of tax havens. Ireland does not meet any of the OECD criteria for being a tax haven but because of its 12.5 per cent corporation tax rate and the open nature of the Irish economy, Ireland has on a few occasions been labelled a tax haven. There are three primary reasons for this identified, each addressed in the paper: a failure to distinguish between legitimate and abusive transfer pricing; a misunderstanding of the role and regulation of IFSC; and a dated but influential academic paper from 1994 that incorrectly included Ireland in a list of tax havens, based on a reason that has long since lost any validity. I INTRODUCTION or a variety of reasons the issue of tax havens has been receiving Fworldwide attention of late. In 2008, a global tax scandal erupted after a former employee of a Liechtenstein trust company provided tax authorities around the world with account data on about 1,400 clients of the company.
    [Show full text]
  • Upsetting the Apple Cart Tax-Based Industrial Policy in Ireland and Europe
    Upsetting the Apple Cart Tax-based industrial policy in Ireland and Europe EDITED BY David Jacobson DRAFT Indigenous Industrialization David Jacobson and Eoin O’Malley Abstract Could Irish industry have been less dependent on MNCs? This question is addressed in a type of counter factual examination of the turn of Irish economic development policy to Export Led Industrialization (ELI) from the Import Substituting Industrialization (ISI) of the 1930s to the 1950s. In a combination of critical examination of some of the policy failures and selection of cases of successful firm and sectoral growth, this paper argues that there have at the very least been missed opportunities. Introduction Irish industrial policies have been specific to particular periods in the economic history of the country’s main trading partners. The policies were based primarily on free trade in the 1920s immediately after independence from Britain (when British policy was also relatively free trading), on protecting local manufacturers against imports from the 1930s (when protectionism was the mainstay in British, American and other countries’ policies), and on export-encouraging from the late 1950s (when the Common Market and Britain’s European Free Trade Area were being established). It may be that the context reduced the degree of freedom facing Irish governments in relation to their choice of policy. When nearly all of a country’s trading partners have raised tariffs and other impediments to its exports, for example, it is politically – if not economically – difficult for that country to adopt free trade. Perhaps the most important policy change in Ireland is that from protectionist ISI to more export-encouraging ELI in the late 1950s.
    [Show full text]