Globalization and Digitalization – Interconnections Between Taxation, Trade and Investment

Recent decades have witnessed structural changes in the way production is organized. Trade and investment liberalization together with technological developments, notably in transport and communications, have substantially reduced trade and foreign investment costs and enabled global value chains, supported by global finance, to proliferate. As a result, trade, foreign investment, financial flows, and cross-border data flows grew rapidly until the financial crisis hit in 2007. In the aftermath of the crisis, trade and investment growth leveled off while growth in cross-border data flows continued unabated. Post the financial crisis the most significant economic development is the rise of the technology sector and the role of digital platforms. The Covid-19 crisis has further acerbated the role of digital platforms in the economy.

Location of production and investment is partly driven by taxation and differences in taxation across jurisdictions. At the same time changes in trade and investment, patterns raise new challenges for tax policy both in relation to tax revenue and for taxes as an instrument for social and environmental sustainability. Thus, taxes, trade, investment, finance, and data are intertwined, and the policy implications of recent developments are best understood when bringing together insights from trade, investment, finance, and tax policy analysis from an economic, legal, and political science perspective.

Against this backdrop, this workshop series comprised four sessions in which a selected group of participants discussed accepted sources of interpretation in public international law, services trade, and the technical issues that concern experts in each field as well as the existent judicial discussions, and the role of tax incentives for investment in the context the digitalization of the economy. The workshop series closed with a final event, where a high-level panel dug deeper into the policy implications of the topics discussed throughout the first four sessions.