A recent trend among MNEs is to replace expatriates in foreign subsidiaries with
ID: 405216 • Letter: A
Question
A recent trend among MNEs is to replace expatriates in foreign subsidiaries with local managers. What are the implications of that policy from the standpoints of (a) the development and implementation of global strategies, (b) the control of foreign subsidiaries and (c) the development of managers with significant international experience and expertise. Does it mean decision-making will necessarily be decentralized? Explain in detail.A recent trend among MNEs is to replace expatriates in foreign subsidiaries with local managers. What are the implications of that policy from the standpoints of (a) the development and implementation of global strategies, (b) the control of foreign subsidiaries and (c) the development of managers with significant international experience and expertise. Does it mean decision-making will necessarily be decentralized? Explain in detail.
Explanation / Answer
a)
The Global Strategy and Plan of Action on Public Health, Innovation and Intellectual Property
Background
Today, 4.8 billion people live in developing countries and 2.7 billion of them (43%) live on less than US$ 2 a day. Communicable diseases account for half of the diseases in these countries. Recognizing that poverty, among other issues, affects access to health products and that new products to fight diseases affecting developing countries are needed, governments, the pharmaceutical industry, foundations, NGOs and others have undertaken initiatives in recent years to address these challenges. But more needs to be done.
To foster innovation and improve access for people in developing countries, the World Health Assembly adopted in May 2008 resolution WHA61.21, and resolution WHA62.16, on a global strategy and plan of action on public health, innovation and intellectual property.
The global strategy
The strategy proposes that WHO should play a strategic and central role in the relationship between public health and innovation and intellectual property within its mandate. Member States endorsed by consensus a strategy designed to promote new thinking in innovation and access to medicines, which would encourage needs-driven research rather than purely market-driven research to target diseases which disproportionately affect people in developing countries.
Elements of the strategy
The eight elements of the global strategy are designed to promote innovation, build capacity, improve access and mobilize resources. These include:
b)
Definition of 'Controlled Foreign Corporation - CFC'
A corporate entity that is registered and conducts business in a different jurisdiction or country than the residency of the controlling owners. Control of the foreign company is defined, in the U.S., according to the percentage of shares owned by U.S. citizens.
Controlled foreign corporation (CFC) laws work alongside tax treaties to dictate how taxpayers declare their foreign earnings. A CFC is advantageous for companies when the cost of setting up a business, foreign branches or partnerships in a foreign country is lower even after the tax implications, or when the global exposure could help the business grow.
Investopedia Says
Investopedia explains 'Controlled Foreign Corporation - CFC'
The CFC structure was created to help prevent tax evasion, which was done by setting up offshore companies in jurisdictions with little or no tax. Each country has its own CFC laws, but most are similar in that they tend to target individuals over multinational corporations when it comes to how they are taxed. For this reason, having a company qualify as independent will exempt it from CFC regulations.
Countries differ in how they define the independence of a company. The determination can be based on how many individuals have a controlling interest in the company, as well as the percentage they control. For example, minimums can range from fewer than 10 to over 100 people, or 50% of voting shares, or 10% of the total outstanding shares.
c)
THE EMPOWERMENT OF THE RURAL POOR THROUGH DECENTRALIZATION IN POVERTY ALLEVIATION ACTIONS
A number of countries in Asia have legislated far-reaching reforms relating to good governance through devolution of authority and responsibility. The challenge of good governance is to ensure the effective implementation of reforms. The recent Asian financial crisis provided the impetus to strengthen local governments to sustain and raise the quality of economic growth. While governments were involved fully in the design of comprehensive reform packages and the related legislation, their inability to ensure implementation limited the impact of such reforms.
The Commission at its various sessions has recognized the importance of good governance through decentralization and has directed the secretariat to assist in people-centred development.
Legislating decentralization policy alone cannot empower people. Decentralization policy should include a social mobilization programme that will motivate poor and marginal households to organize and seek access to available opportunities and resources. The role of external agencies with their resources, expertise and experience is crucial to the decentralized development process. Policy makers often lack comprehensive interaction and feedback and thus appear to be uninvolved in the process.
Learning, dissemination and policy advocacy are integral to the empowerment process. While both government and non-governmental organizations (NGOs) have been involved in the empowerment of the rural poor through decentralization, there has been no systematic documentation on lessons learned to guide policy makers and those others involved. The region has the opportunity to learn from successes and failures in empowering the poor. Reaching the rural poor in a sustained manner should become a critical issue for the current decade. The Commission is requested to deliberate this important issue affecting rural poverty and give guidance for further action.