draining development.pdf - Khazar University

472 Draining Development?predation or theft; and the extent to which capitalism and profitmaking are normatively suspect at the level of public opinion andpolitical rhetoric.2. The extent of the opportunities for grand corruption. This results, inparticular, from the interaction of (a) the existence of opportunitiesfor large rent-taking through the exercise of political power, which isespecially likely in countries with large amounts of point naturalresources such as oil, gas, and minerals, or where drug trafficking andsmuggling are widespread; and (b) weak political and institutionalchecks on corruption.3. The scope for secrecy in asset ownership.4. The capacity of government institutions, especially tax authoritiesand central banks, to monitor, regulate, and tax capital.5. Effective rates of tax on capital.6. The degree of socioeconomic and political inequality.Table 14.2 compares these six political, institutional, and policy(extraeconomic) factors across the four categories of contemporarypolitical jurisdictions. 18 The table sketches on the canvas with a broadbrush, and I am aware that the boundaries between my categories ofjurisdictions are fuzzy and that there are wide variations within them.The comparisons suggest some conclusions about where people whoown or control large amounts of capital prefer to locate it.Table 14.2. Major Political, Institutional, and Policy Characteristics Affecting Decisions onthe Location of Large-Scale Private CapitalCharacteristicOECDWeakstatesTax havensOtherjurisdictionsDegree of property security high low high mixedExtent of opportunities for grand corruption low high low, or — mixed(few residents)Scope for secrecy in asset ownership low mixed high mixedCapacity of government to monitor, regulate, high low mixed mixedand tax capitalEffective tax rates on capital high mixed lowmixedor lowDegree of socioeconomic and political inequality low high — mixedSource: Author compilation.Note: — = not available.