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Public Policies and FDI Location: Differences between Developing and Developed Countries

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  • Timothy Goodspeed
  • Jorge Martinez-Vazquez
  • Li Zhang

Abstract

This paper examines the impact of three host country government policies (taxation, good governance, and infrastructure) on the host's FDI stock. We focus on whether the impact of these factors differs depending on the level of development of the host country. The regression results indicate that FDI is sensitive to host country taxation in developed countries, but not in developing countries; FDI is sensitive to host country governance measures and corruption in both developing countries and developed, with a somewhat larger impact for developing countries; and FDI shows sensitivity to host country infrastructure quality in both developed and developing host countries.

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Bibliographic Info

Article provided by Mohr Siebeck, Tübingen in its journal FinanzArchiv.

Volume (Year): 67 (2011)
Issue (Month): 2 (June)
Pages: 171-191

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Handle: RePEc:mhr:finarc:urn:sici:0015-2218(291106)67:2_171:ppafld_2.0.tx_2-p

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Keywords: FDI location; corporate taxes; corruption; infrastructure; developing countries;

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References

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Cited by:
  1. Jorge Martinez-Vazquez & Timothy Goodspeed & Li Zhang, 2011. "Do Companies View Bribes as a Tax? Evidence on the Trade-off between Corporate Taxes and Corruption in the Location of FDI," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1101, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.

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