Professor Philip Booth and Dr Richard Wellings discuss the importance of IFCs to economic development and why policymakers must resist calls to introduce measures that reduce competition in tax and regulation.
The importance of IFCs to the process of economic development, both as exemplars and facilitators, is a major reason why policymakers must resist calls to introduce measures that reduce competition in tax and regulation. As well as diverting attention from the real causes of poverty, a crackdown on IFCs would hinder the trade and entrepreneurship that drive higher living standards. Moreover, if rules are tightened, the multi-nationals, which are such a focus of anti-IFC campaigns, are likely to benefit at the expense of small, local businesses. Large firms can afford to employ expensive tax lawyers and accountants in order to navigate their way through complex new rules, whereas their smaller competitors would face disproportionate compliance costs. It would be a tragedy if well-meaning development campaigners helped bring about policies that actually increased poverty by hindering international trade and suffocating small businesses.
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