The link between economic growth, and better provision of infrastructure services may be unproven, but it is clear that reforms to make infrastructure services more competitive (where possible), and to provide strong, and independent economic regulation of natural monopolies, do create an...

Mexico has experimented with several tax instruments designed to promote private capital formation. Among such initiatives were general and industry-specific tax credits, employment tax credits, and corporate tax credits. The authors examine relative efficacy of such instruments using a dynamic...

Under cash-flow taxation, a country can tax the cash flow of domestic producers, domestic residents, or domestic citizens. The implications are different in each case. The paper examines the positive and normative effects of various versions of a cash-flow tax, focusing on the effects of such a...

The North American Free Trade Agreement (NAFTA) has had a profound impact on Mexico's economy and institutions. Clearly, no consideration of tax reform can ignore its role. The thinking about tax reform in Mexico requires evaluating NAFTA's effect on Mexico's economy, including its tax...

This report examines the possibility of using a direct tax on consumption as a replacement for an existing income tax within the context of a developing country. The structural differences between income and consumption taxes are described, and some simple examples are used to illustrate the...

The author discusses the risks of infrastructure projects and the costs of capital, rationales for government support of private infrastructure ventures, and approaches to managing government guarantees of private infrastructure investments. Among his recommendations: 1) the decision to grant a...

The author examines the financing of U.S. direct investment abroad. Using a theoretical model, he first examines how home country investors can use debt finance to reduce their host country tax liability and to reduce the capital investment distortion attributable to foreign taxes. Empirically,...

Privatization has been a popular strategy for improving efficiency in both market and transition economies. The literature on privatization includes broad discussions of pricing techniques but overlooks tax issues. In reality, a state-owned company loses its privilege of paying no taxes once it...

Tax sensitivity of foreign direct investment (FDI) has important policy implications. If FDI is not responsive to taxation, then it may be an appropriate target for taxation by the host country, which can raise revenue without sacrificing any economic benefits FDI produces. This paper examines...

The authors contend that in evaluating and designing investment incentives in developing economies, analysts should consider their effect on: the marginal effective tax rate (METR). Even simple tax incentives can perversely affect the METR. Many schemes have relatively generous write-offs to...