International Transfer Pricing for Goods and Intangible Asset Licenses in a Decentralized Multinational Corporation: Review and Extensions

We review and extend the core literature on international transfer price manipulation to avoid or evade taxes. Under negotiated transfer pricing with a viable bargaining structure, including performance evaluation disconnected from the transfer price, divisions voluntarily exchange accurate information to obtain firm-wide optimality, a result not dependent on restraint from exercising internal market power. For intangible licenses, a larger optimal profit shift for a given tax rate change strengthens incentives for transfer pricing abuse. In practice, an intangible's arm's length range is viewed as a guideline, a context where incentives for abuse materialize. Transfer pricing for intangibles obliges greater tax authority scrutiny.

Relationship of hospital volume to patient mortality, length of stay and total costs in patients receiving brain surgery for cancer: A nationwide analysis

Better morbidity and mortality outcomes associated with increased hospital procedural volume have been demonstrated across a number of different medical procedures. Existence of such a volume-outcome relationship is posited to lead to increased specialization of care, such that patients requiring specific procedures are funneled to physicians and hospitals that achieve a minimum volume of such procedures each year. In this study, the 2009 Nationwide Inpatient Sample is used to examine the relationship between hospital volume and patient outcome among patients undergoing procedures related to malignant brain cancer. Multiple regression models were used to examine the impact of hospital volume on length of inpatient stay and cost of inpatient stay; logistic regression was used to examine the impact of hospital volume on morbidity. Hospital volume was found to be a significant predictor of both length of stay and cost of stay. Hospital volume was associated with a lower length of stay, but was also associated with increased costs. Hospital volume was not found to be a statistically significant predictor of morbidity, though less than three percent of this sample died while in the hospital. Volume is indeed a significant predictor of outcome for procedures related to brain malignancies, though further research regarding the cost of such procedures is recommended.^

Domestic Violence Resources for Women Receiving Intensive Family Preservation Services

Intimate partner violence is a common correlate of child abuse and neglect and often is not addressed in family preservation services. In many cases, the ideologies of family preservationists and advocates for women 's safety can be at odds. This article presents a study of a collaborative model of intervention, utilizing family preservation workers and community resource practitioners working with domestic violence as group facilitators. The study utilizes a pretest, post-test design to evaluate a domestic violence resource group for women who were concurrently receiving intensive family preservation services. The study examines the effect of the program on participants' self-perceptions regarding self-esteem, independence, goals, social isolation, and assertiveness. Caseworker perceptions of client characteristics also are evaluated, and qualitative responses of the effects of the program are included.

Study on the effect of metformin in patients of metastatic renal cell cancer with diabetes receiving tyrosine kinase inhibitor therapy

Objective: The primary objective of our study was to study the effect of metformin in patients of metastatic renal cell cancer (mRCC) and diabetes who are on treatment with frontline therapy of tyrosine kinase inhibitors. The effect of therapy was described in terms of overall survival and progression free survival. Comparisons were made between group of patients receiving metformin versus group of patients receiving insulin in diabetic patients of metastatic renal cancer on frontline therapy. Exploratory analyses were also done comparing non-diabetic patients of metastatic renal cell cancer receiving frontline therapy compared to diabetic patients of metastatic renal cell cancer receiving metformin therapy. ^ Methods: The study design is a retrospective case series to elaborate the response rate of frontline therapy in combination with metformin for mRCC patients with type 2 diabetes mellitus. The cohort was selected from a database, which was generated for assessing the effect of tyrosine kinase inhibitor therapy associated hypertension in metastatic renal cell cancer at MD Anderson Cancer Center. Patients who had been started on frontline therapy for metastatic renal cell carcinoma from all ethnic and racial backgrounds were selected for the study. The exclusion criteria would be of patients who took frontline therapy for less than 3 months or were lost to follow-up. Our exposure variable was treatment with metformin, which comprised of patients who took metformin for the treatment of type 2 diabetes at any time of diagnosis of metastatic renal cell carcinoma. The outcomes assessed were last available follow-up or date of death for the overall survival and date of progression of disease from their radiological reports for time to progression. The response rates were compared by covariates that are known to be strongly associated with renal cell cancer. ^ Results: For our primary analyses between the insulin and metformin group, there were 82 patients, out of which 50 took insulin therapy and 32 took metformin therapy for type 2 diabetes. For our exploratory analysis, we compared 32 diabetic patients on metformin to 146 non-diabetic patients, not on metformin. Baseline characteristics were compared among the population. The time from the start of treatment until the date of progression of renal cell cancer and date of death or last follow-up were estimated for survival analysis. ^ In our primary analyses, there was a significant difference in the time to progression of patients receiving metformin therapy vs insulin therapy, which was also seen in our exploratory analyses. The median time to progression in primary analyses was 1259 days (95% CI: 659-1832 days) in patients on metformin therapy compared to 540 days (95% CI: 350-894) in patients who were receiving insulin therapy (p=0.024). The median time to progression in exploratory analyses was 1259 days (95% CI: 659-1832 days) in patients on metformin therapy compared to 279 days (95% CI: 202-372 days) in non-diabetic group (p-value <0.0001). ^ The median overall survival was 1004 days in metformin group (95% CI: 761-1212 days) compared to 816 days (95%CI: 558-1405 days) in insulin group (p-value<0.91). For the exploratory analyses, the median overall survival was 1004 days in metformin group (95% CI: 761-1212 days) compared to 766 days (95%CI: 649-965 days) in the non-diabetic group (p-value<0.78). Metformin was observed to increase the progression free survival in both the primary and exploratory analyses (HR=0.52 in metformin Vs insulin group and HR=0.36 in metformin Vs non-diabetic group, respectively). ^ Conclusion: In laboratory studies and a few clinical studies metformin has been proven to have dual benefits in patients suffering from cancer and type 2-diabetes via its action on the mammalian target of Rapamycin pathway and effect in decreasing blood sugar by increasing the sensitivity of the insulin receptors to insulin. Several studies in breast cancer patients have documented a beneficial effect (quantified by pathological remission of cancer) of metformin use in patients taking treatment for breast cancer therapy. Combination of metformin therapy in patients taking frontline therapy for renal cell cancer may provide a significant benefit in prolonging the overall survival in patients with metastatic renal cell cancer and diabetes. ^

Exploring intra-commonwealth goods and services trade

A background paper for the Commonwealth Secretariat by Anirudh Shingal and Mohammad Razzaque: Existing work examining the trade effect of commonwealth membership does not account for sample selection, unobserved heterogeneity and multilateral resistance in estimation, leading to biased estimates. Our analyses improve on all these fronts. Unlike earlier work, we also consider services trade and assemble a much larger sample of trading partners (242 x 242, over 1995-2010). Commonwealth membership is found to increase goods exports by 18.5-33.2% and services exports by 42.8% in our results, ceteris paribus and on average. Our analyses on the determinants of intra-commonwealth trade suggest the positive role of common language (only for goods trade) and colonial relationships as well as the negative impact of geography, thereby confirming that commonwealth member states are not natural trading partners for each other. Finally, being one of Australia, Canada or the UK is associated with 98.2% greater merchandise trade than the commonwealth average; however, a similar effect is not observed for services trade.

To fuse or not to fuse? Assessing the case for convergent disciplines on goods and services trade

Think piece by Pierre Sauvé for the E15 Initiative on Strengthening the Global Trade System In his latest essay for the ICTSD-World Economic Forum E15 initiative on Strengthening the Global Trade and Investment System for Sustainable Development, WTI Director of External Programmes and Academic Partnerships and faculty member Pierre Sauvé explores the case for fusing the law of goods with that of services in a world of global value chains. The paper does so by directing attention to the questions of whether the current architectures of multilateral and preferential trade governance are compatible with a world of trade in tasks; whether the existing rules offer globally active firms a coherent structure for doing business in a predictable environment; whether it is feasible to redesign the structure and content of existing trade rules to align them to the reality of production fragmentation; and what steps can be envisaged to better align policy and realities in the marketplace if the prospects for restructuring appear unfavourable. The paper argues that fusing trade disciplines for goods and services is neither needed nor feasible and may actually deflect attention from a number of worthwhile policy initiatives where more realistic (if never easily secured) prospects of generic rule-making may well exist.

Pitfalls of location choice analysis : the finished goods producer versus the intermediate goods producer

In literature related to firm location choice, estimation equations are derived from the model of finished goods producers, but producer types are generally not considered. Research presented in this paper shows that the use of equations derived from such models against intermediate goods producers results in several problems.

Market Access and Intermediate Goods Trade

The role of importer access to the finished goods market in intermediate goods trade is examined by estimating the gravity-like equation derived from the NEG model. Importer access to demand for finished goods is calculated by using the estimates in the gravity equation for finished goods trade, and then intermediate goods trade is regressed on the importer access. Results indicate that imports of intermediate goods are sensitive not only to the magnitude of importer demand for finished goods but also to the demand of neighboring countries. Using results of the regression, the impact of US finished goods market expansion on intermediate goods trade in each country is simulated.

Chapter 1 Market Access and Intermediate Goods Trade

This paper examines a distinctive feature of intermediate goods trade which the traditional gravity equation fails to capture, i.e., intermediate goods trade is positively related not only to the importing country's demand for finished goods but also to its neighbors' demand for finished goods. We regress a gravity equation for finished goods trade in the first step. Then, introducing the importing country's access to the total demand for finished goods which is calculated by using the estimates in the first step, we regress our gravity equation for trade in intermediate goods. Our regression results confirm such a feature of intermediate goods trade. Using the results of the regression, we simulate how the rise of US consumers' demand for finished goods affects the total imports and exports of intermediate goods in each country.

Bilateral tariff rates in international trade : finished goods versus intermediate goods

In this paper, we examined back-and-forth international transactions through tariff reduction by estimating modified gravity equations for finished goods and intermediate goods separately. Our main findings are as follows. Exports of finished machinery products are negatively associated with not only the importer's tariff rates on finished machinery products but also the exporter's tariff rates on machinery parts. Similarly, exports of machinery parts are negatively associated with not only the importer's tariff rates on machinery parts but also the exporter's tariff rates on finished machinery products. These results imply that tariff reduction in only one production process in an industry has the potential to drastically change the magnitude of trade in the whole industry.

The rise and fall in the price of food, fuel and manufactured goods : interdependency between prices and technology determining comparative advantages and development paths

Green innovation, which enables us to extract energy from food crops, caused a food shortage in 2008. Countries suffering severe damage started to reconsider their agricultural policy with the aim of becoming more autonomous. The food price hike of the time looks like a reversal of the celebrated Singer-Prebisch thesis proposed in the 1950s. This paper examines the consequences of this trend on the comparative advantages and development strategies of developing countries. For that purpose, first, trends and short-run fluctuations in the prices of fuel and bio-energy crops are investigated. It is shown that the price series of fuels and the crops are synchronized only after the fuel extracting technology came into effect. Second, the reversal of the Singer-Prebisch thesis is underpinned by the generic form of an endogenous growth model developed by Rebelo (1991). It is shown that as an economy grows, appreciation of the non-reproducible, such as mineral resources and raw labor, over the reproducible, such as capital goods, is the norm rather than an anomaly. Third, the consequences of the food price hike and underlying capital accumulation on the development strategies of labor-abundant and low-income countries are explored. It is concluded that the impact of the food price hikes on the alteration of a development strategy is only incremental, without reinforcement from raw-labor-saving innovation. A case study of inventions by JUKI Corporation, a world-leader in the sewing machine market exemplifies the fact that, of all the major inventions the company have made, raw-labor-saving inventions have not dominated, although JUKI's machines are sold to one of the most raw-labor-intensive industries.

International labor migration in Vietnam and the impact of receiving countries' policies

Labor export has been part of Vietnam’s socio-economic development strategy since the beginning of the doi moi era. Recent years, Vietnam has sent about 80,000 workers abroad per year. Vietnam has become a major source country of unskilled foreign workers for high-income East Asian countries. However, in these receiving countries, the desertion rate among Vietnamese workers is quite high, compared with that for workers from other countries. This paper examines the impact of Korean and Japanese policies for receiving foreign workers applied to and implemented in Vietnam, as well as the impact of Vietnamese labor sending system, on the problem of runaway workers.

On the variety of Mexico's export goods

This paper examines the evolution of the variety of Mexico’s export goods using disaggregated trade data. Both the econometric estimation analyses using the raw data and the one using an improved version of Feenstra and Kee's (2004, 2007) methodology proposed in this paper show that NAFTA membership does not enhance the variety of Mexico's export goods. This finding contrasts with NAFTA's positive association with the increase in export variety found in the literature.

What best transfers knowledge? : capital, goods, and innovative labor in East Asia

This paper compares three knowledge carriers—trade, foreign direct investment (FDI), and inventors—as knowledge mediums, and investigates their effects on knowledge flow in East Asia from 1996 to 2010. Using patent citations as a proxy for knowledge flow, this paper shows that FDI and inventor mobility have positive effects on increasing patent citations in East Asia when the technological portfolios of two countries are less similar. While trade shows statistical significance, the effect is inconsistent according to the regression models.

Stability of complementarity between Japanese FDI and import of intermediate goods : agglomeration effects and parent-firm heterogeneity

This paper examines the duration of intermediate goods imports and its determinants for Japanese affiliates in China. Our estimations, using a unique parent-affiliate-transaction matched panel dataset for a discrete-time hazard model over the 2000–2006 period, reveal that products with a higher upstreamness index, differentiated goods, and goods traded under processing trade are less likely to be substituted with local procurement. Firms located in more agglomerated regions with more foreign affiliates tend to shorten the duration of imports from the home country. For parent-firm characteristics, multinational enterprises that have many foreign affiliates or longer foreign production experience import intermediate goods for a longer duration.