The Impacts of Various Taxes on Foreign Direct Investment
AbstractPrevious work on the effect of taxes on foreign direct investment (FDI) focused primarily on capital income taxes. We investigate the proposition that other forms of taxation may also deter FDI. We use tax ratios, i.e., average effective tax rates, on consumption, labor and capital income for a panel of 25 OECD countries from 1975-2006. We find that increases in relative tax rates on capital income encourage net FDI outflow whereas increases in labor income tax rates have the opposite effect. Increases in relative consumption tax rates have insignificant impacts.
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 InfoPaper provided by University of Delaware, Department of Economics in its series Working Papers with number 11-18.
Length: 30 pages
Date of creation: 2011
Date of revision:
Contact details of provider:
Postal: Purnell Hall, Newark, Delaware 19716
Phone: (302) 831-2565
Fax: (302) 831-6968
Web page: http://www.lerner.udel.edu/departments/economics/department-economics/
More information through EDIRC
Tax Ratio; Foreign Direct Investments;
Find related papers by JEL classification:
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
- C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
This paper has been announced in the following NEP Reports:
- NEP-ACC-2011-09-16 (Accounting & Auditing)
- NEP-ALL-2011-09-16 (All new papers)
- NEP-PBE-2011-09-16 (Public Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Peter Egger & Doina Maria Radulescu, 2011.
"Labor Taxation and Foreign Direct Investment,"
Scandinavian Journal of Economics,
Wiley Blackwell, vol. 113(3), pages 603-636, 09.
- Ruud de Mooij & S. Ederveen, 2001.
"Taxation and foreign direct investment; a synthesis of empirical research,"
CPB Discussion Paper
3, CPB Netherlands Bureau for Economic Policy Analysis.
- de Mooij, Ruud A & Ederveen, Sjef, 2003. "Taxation and Foreign Direct Investment: A Synthesis of Empirical Research," International Tax and Public Finance, Springer, vol. 10(6), pages 673-93, November.
- Ruud A. de Mooij & Sjef Ederveen, 2001. "Taxation and Foreign Direct Investment: A Synthesis of Empirical Research," CESifo Working Paper Series 588, CESifo Group Munich.
- David Carey & Harry Tchilinguirian, 2000. "Average Effective Tax Rates on Capital, Labour and Consumption," OECD Economics Department Working Papers 258, OECD Publishing.
- Mihir A. Desai & James R. Hines Jr., 2001.
"Foreign Direct Investment in a World of Multiple Taxes,"
NBER Working Papers
8440, National Bureau of Economic Research, Inc.
- Desai, Mihir A. & Foley, C. Fritz & Hines, James Jr., 2004. "Foreign direct investment in a world of multiple taxes," Journal of Public Economics, Elsevier, vol. 88(12), pages 2727-2744, December.
- Jelle Brouwer & Richard Paap & Jean-Marie Viaene, 2007.
"The Trade and FDI Effects of EMU Enlargement,"
Tinbergen Institute Discussion Papers
07-077/2, Tinbergen Institute.
- Mody, Ashoka & Razin, Assaf & Sadka, Efraim, 2002.
"The Role of Information in Driving FDI: Theory and Evidence,"
CEPR Discussion Papers
3619, C.E.P.R. Discussion Papers.
- Assaf Razin & Ashoka Mody & Efraim Sadka, 2002. "The Role of Information in Driving FDI: Theory and Evidence," NBER Working Papers 9255, National Bureau of Economic Research, Inc.
- S. Lael Brainard, 1993. "An Empirical Assessment of the Factor Proportions Explanation of Multi-National Sales," NBER Working Papers 4583, National Bureau of Economic Research, Inc.
- Jeffrey Frankel & Shang-Jin Wei, 1996.
"ASEAN in a regional perspective,"
Pacific Basin Working Paper Series
96-02, Federal Reserve Bank of San Francisco.
- Frankel, Jeffrey A. & Wei, Shang-Jin, 1996. "ASEAN in a Regional Perspective," Center for International and Development Economics Research, Working Paper Series qt7g38z09z, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.
- Jeffrey A. Frankel and Shang-Jin Wei., 1996. "ASEAN in a Regional Perspective," Center for International and Development Economics Research (CIDER) Working Papers C96-074, University of California at Berkeley.
- Rosanne Altshuler & Harry Grubert & T. Scott Newlon, 2000.
"Has U.S. Investment Abroad Become More Sensitive to Tax Rates?,"
in: International Taxation and Multinational Activity, pages 9-38
National Bureau of Economic Research, Inc.
- Rosanne Altshuler & T. Scott Newlon & Harry Grubert, 2002. "Has U.S. Investment Abroad Become More Sensitive to Tax Rates?," Departmental Working Papers 199806, Rutgers University, Department of Economics.
- Rosanne Altshuler & Harry Grubert & T. Scott Newlon, 1998. "Has U.S. Investment Abroad Become More Sensitive to Tax Rates?," NBER Working Papers 6383, National Bureau of Economic Research, Inc.
- Peter Egger & Michael Pfaffermayr, 2003. "The proper panel econometric specification of the gravity equation: A three-way model with bilateral interaction effects," Empirical Economics, Springer, vol. 28(3), pages 571-580, July.
- Ruud A. de Mooij & Sjef Ederveen, 2008.
"Corporate Tax Elasticities A Reader’s Guide to Empirical Findings,"
0822, Oxford University Centre for Business Taxation.
- Ruud A. de Mooij & Sjef Ederveen, 2008. "Corporate tax elasticities: a reader's guide to empirical findings," Oxford Review of Economic Policy, Oxford University Press, vol. 24(4), pages 680-697, winter.
- Mendoza, Enrique G. & Razin, Assaf & Tesar, Linda L., 1994.
"Effective tax rates in macroeconomics: Cross-country estimates of tax rates on factor incomes and consumption,"
Journal of Monetary Economics,
Elsevier, vol. 34(3), pages 297-323, December.
- Enrique G. Mendoza & Assaf Razin & Linda L. Tesar, 1994. "Effective Tax Rates in Macroeconomics: Cross-Country Estimates of Tax Rates on Factor Incomes and Consumption," NBER Working Papers 4864, National Bureau of Economic Research, Inc.
- David Carey & Josette Rabesona, 2002. "Tax Ratios on Labour and Capital Income and on Consumption," OECD Economic Studies, OECD Publishing, vol. 2002(2), pages 129-174.
- Jonathan Eaton & Akiko Tamura, 1995.
"Bilateralism and Regionalism in Japanese and U.S. Trade and Direct Foreign Investment Patterns,"
NBER Working Papers
4758, National Bureau of Economic Research, Inc.
- Eaton Jonathan & Tamura Akiko, 1994. "Bilateralism and Regionalism in Japanese and U.S. Trade and Direct Foreign Investment Patterns," Journal of the Japanese and International Economies, Elsevier, vol. 8(4), pages 478-510, December.
- Jonathan Eaton & Akilo Tamura, 1994. "Bilateralism and Regionalism in Japanese and U.S. Trade and Direct Foreign Investment Patterns," Boston University - Institute for Economic Development 48, Boston University, Institute for Economic Development.
- Egger, Peter, 2000.
"A note on the proper econometric specification of the gravity equation,"
Elsevier, vol. 66(1), pages 25-31, January.
- Peter Egger, . "A Note on the Proper Econometric Specification of the Gravity Equation," WIFO Working Papers 108, WIFO.
- Mervyn A. King & Don Fullerton, 1984. "The Taxation of Income from Capital: A Comparative Study of the United States, the United Kingdom, Sweden, and Germany," NBER Books, National Bureau of Economic Research, Inc, number king84-1, October.
- Dana Hajkova & Giuseppe Nicoletti & Laura Vartia & Kwang-Yeol Yoo, 2006. "Taxation and business environment as drivers of foreign direct investment in OECD countries," OECD Economic Studies, OECD Publishing, vol. 2006(2), pages 7-38.
- Sven Stöwhase, 2006. "Tax-Rate Differentials and Sector Specific Foreign Direct Investment: Empirical Evidence from the EU," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 61(4), pages 535-558, February.
- Selen Sarisoy Guerin, 2006. "The Role of Geography in Financial and Economic Integration: A Comparative Analysis of Foreign Direct Investment, Trade and Portfolio Investment Flows," The World Economy, Wiley Blackwell, vol. 29(2), pages 189-209, 02.
- Peter Egger, 2005. "Alternative Techniques for Estimation of Cross-Section Gravity Models," Review of International Economics, Wiley Blackwell, vol. 13(5), pages 881-891, November.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Saul Hoffman).
If references are entirely missing, you can add them using this form.