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Multinationals, Tax Holidays, and Technology Transfer

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  • Kaz Miyagiwa
  • Yuka Ohno

Abstract

Host country governments often grant investment incentives to foreign firms locating in their territories. We show that such preferential treatment of foreign firms can facilitate transfer of foreign technology, induce entry by the local firm, and increase host country welfare. However, this pro-competitive result occurs when preferential treatment is granted for a limited time; i.e., it takes the form of tax holidays, and is absent under permanent tax concessions.

Suggested Citation

  • Kaz Miyagiwa & Yuka Ohno, 2008. "Multinationals, Tax Holidays, and Technology Transfer," ISER Discussion Paper 0717, Institute of Social and Economic Research, Osaka University.
    • Handle: RePEc:dpr:wpaper:0717
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    File URL: https://www.iser.osaka-u.ac.jp/library/dp/2008/DP0717.pdf
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    References listed on IDEAS

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    1. Miyagiwa, Kaz & Ohno, Yuka, 1995. "Closing the Technology Gap under Protection," American Economic Review, American Economic Association, vol. 85(4), pages 755-770, September.
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    Cited by:

    1. Magdalena Owczarczuk, 2013. "Government Incentives and FDI inflow into R&D – The Case of Visegrad Countries," Entrepreneurial Business and Economics Review, Centre for Strategic and International Entrepreneurship at the Cracow University of Economics., vol. 1(2), pages 73-86.
    2. Romualdas Ginevičius & Agnė Šimelytė, 2011. "Government incentives directed towards foreign direct investment: a case of central and eastern europe," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 12(3), pages 435-450, May.
    3. Chen, Feiqiong & Zhong, Fangfang & Chen, Yao, 2014. "Outward foreign direct investment and sovereign risks in developing host country," Economic Modelling, Elsevier, vol. 41(C), pages 166-172.

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