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FDI and Taxation: A Meta-Study

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  • Lars P. Feld
  • Jost Henrich Heckemeyer

Abstract

Despite the continuing political interest in the usefulness of tax competition and tax coordination as well as the wealth of theoretical analyses, it still remains open whether or when tax competition is harmful. Moreover, the influence of tax differentials on multinationals’ decisions is still insufficiently analyzed. Thus, economists have increasingly resorted to empirical analysis in order to gain insights on the elasticity of FDI with respect to company taxation. As a result, the empirical literature on taxation and international capital flows has grown to a similar abundance during the last 25 years as the respective theoretical literature. Its heterogeneity leads to a rising need for concise reviews on the existing empirical evidence. In this paper we extend former meta-analyses on FDI and taxation in three ways. First, we add the most recent publications unconsidered in meta-analyses up-to-date. Second, we apply a different methodology by using a broad set of meta-regression estimators and explicitly discuss which one is most suitable for application to our meta-data. Third, we address some important issues in research on FDI and taxation to the clarification of which meta-analysis can make valuable contributions. These issues are mainly: The influence of variables which might moderate effects of tax differentials (e.g. public spending), the implications of using aggregate FDI data as opposed to firm-level information on measured tax effects, the implications of bilateral effective tax rates, and the possible presence of publication bias in primary research.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 2540.

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Date of creation: 2009
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Handle: RePEc:ces:ceswps:_2540

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Keywords: corporate income taxation; foreign direct investment; meta analysis;

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References

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Cited by:
  1. Markus Leibrecht & Claudia Hochgatterer, 2012. "Tax Competition As A Cause Of Falling Corporate Income Tax Rates: A Survey Of Empirical Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 26(4), pages 616-648, 09.
  2. Johannes Becker & Andrea Schneider, 2012. "Taxation of Firms with Unknown Mobility," CESifo Working Paper Series 4012, CESifo Group Munich.
  3. Elschner, Christina & Heckemeyer, Jost Henrich & Spengel, Christoph, 2009. "Besteuerungsprinzipien und effektive Unternehmenssteuerbelastungen in der Europäischen Union," ZEW Discussion Papers 09-034, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  4. Dackehag , Margareta & Hansson, Åsa, 2012. "Taxation of Income and Economic Growth: An Empirical Analysis of 25 Rich OECD Countries," Working Papers 2012:6, Lund University, Department of Economics.
  5. Dreßler, Daniel, 2012. "The impact of corporate taxes on investment: An explanatory empirical analysis for interested practitioners," ZEW Discussion Papers 12-040, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  6. Christina Elschner & Jost H. Heckemeyer & Christoph Spengel, 2011. "Besteuerungsprinzipien und effektive Unternehmenssteuerbelastungen in der Europäischen Union: Regelt sich die EU‐weite Steuerharmonisierung von selbst?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 12(1), pages 47-71, 02.
  7. T.D. Stanley & Hristos Doucouliagos, 2011. "Meta-Regression Approximations to Reduce Publication Selection Bias," Economics Series 2011_4, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
  8. Feld, Lars P. & Heckemeyer, Jost H. & Overesch, Michael, 2011. "Capital structure choice and company taxation: A meta-study," ZEW Discussion Papers 11-075, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  9. Wiji Arulampalam & Michael P. Devereux & Federica Liberini, 2012. "Taxes and the Location of Targets," Working Papers 1213, Oxford University Centre for Business Taxation.
  10. Katarína Danišková & Jarko Fidrmuc, 2012. "Meta-Analysis of the New Keynesian Phillips Curve," Working Papers 314, Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies).
  11. Jon Nelson & Peter Kennedy, 2009. "The Use (and Abuse) of Meta-Analysis in Environmental and Natural Resource Economics: An Assessment," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 42(3), pages 345-377, March.
  12. Spengel, Christoph & Lazar, Sebastian & Evers, Lisa & Zinn, Benedikt, 2012. "Romania's development to a low-tax country: Effective corporate tax burden in Romania from 1992 to 2010 and Romania's current ranking among the eastern European member states," ZEW Discussion Papers 12-003, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  13. Michael Devereux & Li Liu & Simon Loretz, 2012. "The Elasticity of Corporate Taxable Income: New Evidence from UK Tax Records," Working Papers 1223, Oxford University Centre for Business Taxation.

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