Negotiating a royalty pricing agreement: lessons from Liberia

By Stephen E. Shay, Lecturer at Harvard Law School; Iain Steel, independent economics consultant; Gabrielle Beran, Governance and Program Manager, International Senior Lawyers Project-UK (ISLP-UK); Olumide Abimbola, Business Development Lead, CONNEX Support Unit.

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Mount Nimba, Liberia: an abandoned mining site and the highest point in West Africa

Countries often collect royalties on the sale of their natural resources, but how can they be sure that the price is right when a mining company sells iron ore to its own steel mills? This was the problem faced by Liberia with its largest iron ore mine – and a common problem around the world in mining and many other sectors.

Sales between “related parties”, where the companies share a common owner and are therefore not independent of each other, use a “transfer price[i]” that is supposed to reflect fair market value – the price two independent firms would have agreed transacting at arm’s length. In this article, we describe how governments can make use of pricing agreements with companies to determine transfer prices by reference to international benchmarks, and the importance of reviewing these agreements to ensure they remain fit for purpose over time. We also draw lessons for revenue authorities, host governments and donor partners from the recent renegotiation of a pricing agreement in Liberia. Continue reading

Combating COVID-19: Data everywhere but not the kind we need

By Julia Schmidt, Policy Analyst, Archita Misra, Policy Analyst and Johannes Jütting, Executive Head, Partnership in Development for the 21st Century (PARIS21)


This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.



statistics-covid-19-shutterstoc-1688596069Earlier this year at the Munich Security Conference, World Health Organisation Director-General Tedros Adhanom Ghebreyesus said, “We’re not just fighting an epidemic; we’re fighting an infodemic”. He was referring to the excessive amount of information surrounding the COVID-19 pandemic. Data dashboards, aggregators and charts of all types have formed the basis of much of what we know about the pandemic, lending a veneer of legitimacy to often contradictory or competing claims. While it is true that on some levels we have never had so much data, it may not be the data we need for sustained policy response and recovery. This is especially true among least-developed countries, where looming data gaps, even in foundational statistics, persist and may seriously undermine the ability of governments to develop effective COVID-19 response and recovery measures. Continue reading

Middle East and North Africa: The challenge of a long-term strategy for oil exporting countries

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By Rahmat Poudineh, Senior Research Fellow and Director of Research, the Oxford Institute for Energy Studies


This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.


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Oil refinery plant in Qatar

There is no single successful strategy to shield oil-exporting countries of the Middle East and North Africa (MENA) from the long-term risks of an oil price crash, exposing them to serious long-term challenges.

Diversification for example, works only when it reduces risk by pooling uncorrelated income streams and sectors. If countries diversify only into sectors that rely on hydrocarbon infrastructure and where relationships (tangible and non-tangible) exist across fossil and non-fossil fuel businesses, they cannot build resilience. On the other hand, if they diversify into substantively different areas that have little in common with their current primary industry, which is the core of their comparative advantage, they run the risk of not being competitive. Moreover, the cost of reducing the long-term risks and increasing resilience of their core sector is to accept lower expected return on existing hydrocarbon assets, for instance, by investing in measures that align their hydrocarbon sector with low carbon scenarios. This lowers the overall return but reduces the risk of disruption in the long run. Continue reading

Trading to avoid falling behind in the COVID-19 crisis: Lessons from Central America to boost prosperity

 By Rodrigo Méndez Maddaleno, Economist at Chief Economist Office, Central American Bank for Economic Integration (CABEI)


This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.


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Panama City, Panama – container vessel leaving the Panama Canal. Photo: Shutterstock

If what and where you export matters, Central American countries need to upgrade the quality of their exports, produce new ones and dive into new markets.

Central American countries are open to international trade. Trade in the region represents 67% of GDP, more than the world’s average of 51%. Average tariff rates for the region have also shown a consistent decline since 2005 going from 7% to 5%. However, the region’s economic performance has not reflected this, with an average GDP per capita growth of around 2.5% in the 2000s, which means that income doubles approximately every 30 years. So why has there not been an economic take-off? What is missing in the region when it comes to trade and economic policy in general? These questions are even more relevant today, as COVID-19 and the global crisis are affecting the region and its major trading partners.

To address this, it is important to analyse several aspects of Central American trade, such as export composition, main destination markets, and discuss what the region can do to improve its situation and boost economic growth and prosperity. Continue reading

COVID-19, révélateur de la valeur de la vie humaine pour la société ?

Par Joseph Brunet-Jailly, Économiste, Paris School of International Affairs, SciencesPo Paris


Ce blog fait partie d’une série sur la lutte contre le COVID-19 dans les pays en voie de développement. Visitez la page dédiée de l’OCDE pour accéder aux données, analyses et recommandations de l’OCDE sur les impacts sanitaires, économiques, financiers et sociétaux de COVID-19 dans le monde.


COVID-19-sahelLa pandémie que nous vivons marque l’apparition inopinée d’une valeur de la vie humaine dans les préoccupations de l’humanité.

Certes, nous étions habitués aux proclamations solennelles selon lesquelles la valeur de la vie humaine serait absolue. Mais de là à considérer que la vie humaine devrait être l’aune à laquelle tout progrès se mesurerait, il y avait un grand pas qu’on ne voulait pas franchir. Il était tellement plus important de s’enrichir en biens matériels que la vie humaine elle-même y a été asservie : esclavage, servage, misère ouvrière, guerre, racisme, phobie des migrants, etc., autant de termes pour dire des vies humaines méprisées. Continue reading

Risk and Resilience: How East Africa could bounce back from the COVID-19 Pandemic

By Andrew Mold, Head of Regional Integration and the AfCFTA, Economic Commission for Africa, Office for Eastern Africa, Kigali, Rwanda


This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.


 

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Nairobi, Kenya: Skyline cleared as pollution has slowed down during lockdown due to the COVID-19 Pandemic, April 2020. Photo: Youssef Abu Aly/Shutterstock

A hitherto rapidly growing but vulnerable region

The best-laid plans of mice and men often go awry. Prior to the announcement of a global pandemic on 11th March by WHO, our office was about to a release a report which spoke of the fairly rosy prospects for East Africa in 2020, after a decade of solid growth. That report recognised the persistence of serious developmental challenges but highlighted major improvements not just in economic growth (the region has been the fastest growing sub-region in Africa since 2014), but also in human development. One simple statistical illustration of this – life expectancy over the last decade has risen by an unprecedented 6.7 years on average.

Just a few months later we are now presented with a quite different panorama, both for the global economy and East Africa. For the region, 2020 – and quite possibly 2021 – is no longer going to be characterised by a continued economic dynamism, but rather a sluggish economic malaise, as countries wrestle with ballooning fiscal deficits, deteriorating trade balances, and a serious disruption to normal economic activity.    Continue reading

COVID-19: Can corporates be leaders in community support?

By Mr. V S Parthasarathy, President, Mobility Services Sector, Mahindra Group; Member of the Group Executive Board, Mahindra & Mahindra Ltd.; President, Bombay Chamber of Commerce and Industry


This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.


shutterstock_109766645It is invigorating to see people, communities and organisations across the world answer the clarion call to provide support to those in need. We are seeing waves of good news roll in – from students driving out to show their appreciation to teachers, to families standing outside hospitals to thank front line medical staff.

Corporations have also pitched in to help governments and citizens fight the coronavirus pandemic. Many businesses are using their resources and expertise to shape their response. T-Mobile partnered with Verizon, AT&T, and iHeartMedia to donate nearly 40,000 phone chargers to hospitals in the US for isolated patients to stay connected to loved ones. Subaru has partnered with Feeding America to help provide 50 million meals nationwide to people impacted by COVID-19. The Tata Group pledged Rs 1,500 cr towards relief funds. 3M, Prada, Gucci, Tesla, Ford, Apple, the maker of Absolut Vodka and Jameson Irish Whiskey, owner of Zara, and many other businesses, have converted production lines to manufacture short-supplied personal protective gear and medical supplies. In short, they are stepping far beyond their ordinary workflow.

To respond, adapt and recover from this crisis, I believe companies ought to focus on three basic fronts.

Continue reading

Haitian Families and Loss of Remittances During the COVID-19 Pandemic

By Toni Cela, Senior Research Associate of the Migration for Development and Equality (MIDEQ) hub & Co-ordinator of the Interuniversity Institute for Research and Development (INURED), and Louis Herns Marcelin, Co-Director of the MIDEQ project; Professor at the University of Miami; & Chancellor of INURED


This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.


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Port-au-Prince, Haiti. Photo: Rafal Cichawa/Shutterstock

Migration has always featured prominently in Haiti’s history. At times forced, as in the case of sociopolitical repression and the aftermath of disasters, induced to fulfil labour and workforce needs in the Caribbean and in other periods voluntary as in the circulatory movement recorded in the Caribbean, South and North America. Over the past decades, migration in Haiti has evolved from a survival strategy for individual migrants and their families to now buttressing the local economy through the transfer of remittances. This reality was made evident during the 2010 earthquake rebuilding effort when the Haitian diaspora identified itself as Haiti’s “single largest donor” citing “the magnitude of its remittances to the Haitian Republic and how those contributions totalling [USD] $2 billion dollars annually allot[ed] for 30% of the GNP .”  In comparison, public revenues, excluding grants, represent 13% of GDP and are projected to fall to 10% in 2020.

Remittance transfers to Haiti have continued to grow over the past decade, the lion’s share of funds originating in countries throughout the Americas, particularly the United States, where the majority of Haitians have settled. Yet, the global economic crisis brought on by the COVID-19 pandemic poses a serious threat to the global remittance economy. For Haiti, reduction in remittances will further weaken an already feeble economy while negatively impacting the livelihood and health of families and communities. Continue reading

COVID-19: Forging a new social contract in the Middle East and North Africa

 By Rabah Arezki, Chief Economist for Middle East and North Africa Region at the World Bank and Mahmoud Mohieldin, United Nations Special Envoy for the 2030 Agenda


This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.


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Egypt, Hurghada: Disinfection of a street during the coronavirus outbreak, March 2020. Photo: Aleks333/Shutterstock

The COVID-19 crisis and its dual shock of disease and falling oil prices have brought to light the underlying flaws of Middle Eastern and Northern African (MENA) economies today. Flaws that authorities must fix if the region is to prosper.

At the global level, there will likely be a ramping up of the role of the state to eradicate the virus and protect economies from depression. State intervention is already high in the MENA region (see Figure 1). How well this helps countries cope first with the pandemic and then its aftermath depends on their ability to refocus, be more transparent, and develop accountability mechanisms.

Figure 1. Government Consumption in GDP

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Continue reading

How COVID-19 can change incentives for development co-operation

By Nilima Gulrajani, Senior Research Fellow, ODI


This blog* is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.


cooperation-hands-puzzle-world-2There is nothing new in accusing bilateral donors of repurposing foreign aid to serve their domestic national interests. Even before the current pandemic, donors had been slashing aid in exchange for middle-class tax breaks, twisting the definition of official development assistance (ODA) to allow for the inclusion of expenditures in wealthier countries, and tying aid to the uptake of domestic consultants. So, what happens now, as economic and social needs expand globally with every case of COVID-19 detected and every grave marked?

The initial vital signs of international collective action are not promising. Some politicians have come under flak for donating personal protective equipment to other countries just before domestic demand skyrocketed, even if this equipment was set to expire and the favour returned in kind. Others stand accused of using medical aid to further diplomatic ambitions. Yet others have gone even further, seemingly keen to upend global co-operation and dismantle the very institutional architecture able to marshal both the transnational networks and political leadership required to detect, monitor and eventually stop this unpredictable pathogen. In short, there are worrying signs about the possibility of upholding a functioning multilateral co-operation system, even among supposedly like-minded actors. Continue reading