7. Global capital and national growth - Ireland and Latvia Flashcards
What is Phantom FDI?
Foreign investments in a country, for tax avoidance purposes rather than real business activities
What is a Tax Avoidance Strategy?
A method used by companies to legally reduce their tax liability, often by shifting profits to low-tax jurisdictions
Why did the European Commission say Ireland gave Apple illegal tax benefits?
In 2016, the Commission ruled that Ireland gave Apple unfair tax advantages through special arrangements, allowing them to pay much less tax than other companies. This was deemed illegal state aid, leading to a €13 billion back tax order.
What is a Peripheral Growth Model?
That is when Economies depend on foreign investment or integration into global supply chains (Ireland and Latvia)
What is Irelands growth model?
Peripheral Growth Model - driven by FDI and their low corporate tax.
What is a Multinational Corporation (MNC)?
When big companies use Ireland as a base to sell to the rest of the world.
What is Kleptocracy, and where is it seen?
A system where leaders exploit state resources for personal gain, often leading to corruption, inequality, and concentrated wealth. Is connected to money laundering. It is seen in countries like Latvia.
What is a Global Wealth Chain?
Chains of transactions that move wealth and assets around the world to avoid taxes and regulations.
What is Shock Therapy? And what country have used it?
A rapid transition from a state-controlled economy to a free-market system, often involving privatization, deregulation, and reduced state control. Common in the post-communist countries and has been used by Poland in the 1990’s
What was the “Double Irish” tax strategy?
A scheme where MNCs shifted profits to tax havens like Bermuda via Ireland.
What risks are associated with Ireland’s growth model?
Dependence on MNCs makes it vulnerable to global tax reforms and trade shocks.
How did Latvia’s growth model change after 2008?
Shifted from demand-driven to export-driven growth.
How much of Ireland’s FDI is considered phantom?
Around two-thirds of foreign investments.
