"The political economy of globalisation and regional integration: The case of tax policy co-ordination in the European Union"

Ugur, Mehmet. (2001) "The political economy of globalisation and regional integration: The case of tax policy co-ordination in the European Union". In: UNSPECIFIED, Madison, Wisconsin. (Unpublished)

Preview

PDF Download (1468Kb) | Preview

Abstract

Globalisation and regional integration increase the scope for movement between jurisdictions. As a result, tax policy arbitrage and policy convergence can be expected to constrain public policy choices. Nevertheless, regional integration can also enable the policy-makers to reclaim policy autonomy as the rates of return on constituent loyalty are equalized by convergent policy choices. This paper reviews the debate and develops an analytical framework that enables us to explain the linkages between and policy implication of globalisation and regional integration in an open-ended manner. We propose a political economy framework that differentiates between market-driven and institutionalized policy convergence under increased interjurisdictional mobility. The proposed analytical framework is applied to the EU's experience in tax policy coordination. We observe that globalisation and the deepening of European integration have in fact enabled EU and national policy-makers to reclaim policy autonomy and make attempts to halt/reverse the market-driven process of tax competition. Although the pro-active co-ordination effort is still in its infancy, it constitutes a significant development that stands in contrast to the prisoners' dilemma outcomes of the 1980s and early 1990s.

Actions (login required)