Empirical Analysis of Corporate Tax and Foreign Direct Investment
AbstractThis paper provides the insight into the effect of corporate income tax on foreign direct investment. The enhanced liquidity of labor and capital through globalization has accelerated the efficient and global utilization of human resources and capital. Considering this situation, many countries are acutely aware of the importance of attracting foreign direct investment in order to vitalize and promote economic growth. Many countries, therefore, have been providing and developing attractive environments for investments, and have lowered their corporate tax rates one after another. However, there are many elements which affect foreign direct investment and the effect of corporate tax on foreign direct investment is not necessarily apparent. We therefore empirically analyze foreign direct investment based on a panel of bilateral foreign direct investment flows among OECD 30 countries over 1985 – 2007. In this paper, we further address the dynamic panel data analysis (System GMM) through the expansion of the static panel data analysis in the previous research. This is why we recognize that the current scale of foreign direct investment may be influenced by the investment level of the previous year. We confirmed the expected result in the empirical analyses, namely, that the current scale of foreign direct investment is influenced by the investment level of the previous period. These studies also implied that the impact of corporate tax on foreign investment is significantly negative.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Policy Research Institute, Ministry of Finance Japan in its journal Public Policy Review.
Volume (Year): 8 (2012)
Issue (Month): 1 (June)
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Policy Research Institute).
If references are entirely missing, you can add them using this form.