Migration - EQ2 - 1.6 Globalisation & the growth of new types of states Flashcards
Globalisation has led to the deregulation o f….. & the emergence of ……
- capital markets
- new states forming
What are tax havens
- Several governments have expanded their lack of financial regulation with low
- income taxes and corporation tax rates, designed to attract wealthy individuals
- and TNCs to register themselves there
- These countries, such as The Cayman Islands, are known as tax havens
what is tax avoidance
- using legal loppholes to legallyy reduce how much tax you have to pay
what is tax evasion
- illegally noy paying atxes you owe
what are the different features of tax avoidance in tax havens
- corporate profit shifting –> TNCs can locate their headquarters to a low tax country
registering TNCS profits there - individuals can move to a tax haven –> unpopular as people like to live in home country
- individuals can remain living in home country but can invest their money in a trust in a tax haven
Who is OECD
- Organisation for Economic Cooperation & Development
- 38 member countries
- it is an intenational organisation committed to promoting policies to improve economic & social wellbeing
How has income growth disproportionately benfitted OECD countries and the global elite
- rapid economic development
- Countries that offer tax incentives can develop quickly or, like Ireland, recover from severe recessions more quickly
- Ireland offers companies a rate of 12.5% corporation tax, compared to 20% in the UK.
- Ireland has received over £180 billion of US FDI over the last 20 years: more than US investment in all four BRICSs combined.
How has income growth disproportionately benfitted OECD countries and the global elite
- economic growth
- Most governments and IGOs accept tax havens and tax avoidance because of the boost to economic growth that they deliver
- Luxembourg has a special tax break that allows companies to save millions in tax payments in Luxembourg on profits earned in other countries
- More than 40, 000 TNC headquarters in Luxembourg benefitting from this
How has income growth disproportionately benfitted OECD countries and the global elite
- When TNCs are located in several different nations, it would not be fair to tax them in full in each one
- national govts generate employment & wealth –> and national govts have freedom to do as they please is general attitude
What is the gini coefficient
- a measure of the distribution of wealth within a population of a country as a way of demonstrating how much equality there is
- measured on a scale of 0-100 - 100 being highest inequality
Where is there usually higher wealth inequality
- within developed countries due to higher incomes in upper quintile
Who are expatriates
- those who live in countrys inwhich they are not a citizen
What objection has there been to tax havens
- NGOs have raised objections
- EU declared that the ability of TNCs to move revenues earned throughout the EU to low tax member states like Ireland was unfair - 2015
Explain impacts of uneven distribution of wealth
- unequal access to quality education
Explain impacts of uneven distribution of wealth
-jobs
low pay, low skilled jobs for the porresy with little job prospects –> reducing their life expectancy
Explain impacts of uneven distribution of wealth
-political instability
- people reject the established political classes who they iddentify with the rich elite
- Trumps’ campaig built around supporting w/c via tarriffs threatens the global economci system & the free movement of economic goods
- 125 levies imposed on Chinese imports in April 2025 - trade war with china
Describe the geographical context of the Caymen Islands
- consists of 3 neighbouring Carribbean Islands with a combined population of 56,000
how many registered companies in the Caymen Islands
- 100,000
Since 2009, ……………. government has used wealth to reduce …..
- Bolivia’s socialist
- inequalities
Describe the Caymen Islands as an offshore tax haven
- among one of the world’s largest offshore financial centres
- only permitted to work with business residents outside their territory
- 0% personal income tax & low corporation taxes
- 40 of the world’s largets investment banks have headquarters there
What policies did Bolivia implement to reduce inequalities
- nationalising oil and other resources, so that revenues go to the government rather than to private owners and shareholders
- subsidising costs for poorer citizens, so the government pays to make food cheaper than it otherwise would be
- redistributing wealth to the Campestino ‘peasant classes’ by guaranteeing prices for food products
- import substitution: reducing imports by producing more products in Bolivia
Advantages of Bolivia’s alternative economic model which rejects liberal economics
- Bolivia’s policies have reduced inequality: from Gini index of 63 in 2000 to 45.8 in 2015
- Import substitution has boosted the economy: growth is above 4% per year
Disadvantages of Bolivia’s alternative economic model which rejects liberal economics
- Its GDP per person of $3393 remains the lowest in South America
- Although Bolivia rejects the West’s economic model, state budgets are dependent on international oil and gas prices
