Page 46 - Volume 2_CHANGES_merged_with links

Some Key Terms

Changes!

Tax Competition 73

Tax competition, a form of regulatory competition, exists when governments use
reductions in fiscal burdens to encourage the inflow of productive resources or to

discourage the exodus of those resources.

Often, this means a governmental strategy of attracting foreign direct investment, foreign
indirect investment (financial investment), and high value human resources by

minimizing the overall taxation level and/or special tax preferences, creating a
comparative advantage.

Scholars generally consider economic development incentives to be inefficient,

economically costly, and distortionary.

"Tax Competition."
Wikipedia
The Informal Economy 74

An informal economy (informal sector or grey economy) is the part of any economy that

is neither taxed nor monitored by any form of government

"Informal Economy"
Wikipedia
Tied Aid 75

Tied aid is Foreign Aid that must be spent in the country providing the aid (the donor

country) or in a group of selected countries. A developed country will provide a bilateral
loan or grant to a developing country, but mandate that the money be spent on goods or
services produced in the selected country.

***
In the worst-case scenario of OECD, the tying of aid can reduce its value by as much as
30 percent

"Tied Aid."
Wikipedia

Transfer Mispricing 76
Trade misinvoicing is a method for moving money illicitly across borders which involves

the deliberate falsification of the value, volume, and/or type of commodity in an
international commercial transaction of goods or services by at least one party to the

transaction. Trade misinvoicing is the largest component of illicit financial outflows
measured by Global Financial Integrity