Rational Asymmetric Development: Transfer Pricing and Sub-Saharan Africa’s Extreme Poverty Tragedy

Asongu, Simplice (2015): Rational Asymmetric Development: Transfer Pricing and Sub-Saharan Africa’s Extreme Poverty Tragedy.

Abstract

A recent publication by the World Bank on Millennium Development Goals (MDGs) has established that extreme poverty has been decreasing in all regions of the world with the exception of sub-Saharan Africa (SSA), in spite of over two decades of growth resurgence. This chapter explores the role of transfer pricing in SSA’s extreme poverty tragedy. The analytical structure entails: (i) emphasis of rational asymmetric development as the dark side of transfer pricing, (ii) evidence that the recent growth resurgence in African countries has been driven substantially by resource-rich countries which are experiencing high levels of exclusive growth and extreme poverty, (iii) the practice of transfer pricing by multinationals operating in resource-rich countries of SSA and (iv) a Zambian case study of extreme poverty and transfer pricing schemes by Glencore in the copper industry. While transfer pricing is contributing to diminishing African growth, available evidence shows that the component growth that is not captured by transfer pricing does not trickle down to the poor because the African elite is also captured by practices of rational asymmetric development. Policy implications for the fight against extreme poverty are discussed.

• Item Type: MPRA Paper
• Language: English
• Keywords: Transfer pricing, Asymmetric development; Extreme poverty; SSA
• Subjects: F - International Economics > F2 - International Factor Movements and International Business > F20 - General; F - International Economics > F5 - International Relations, National Security, and International Political Economy > F50 - General; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H20 - General; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O55 - Africa

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