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Do Bilateral Tax Treaties Promote Foreign Direct Investment?

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  • Bruce A. Blonigen
  • Ronald B. Davies

Abstract

We explore the impact of bilateral tax treaties on foreign direct investment using data from OECD countries over the period 1982-1992. We find that recent treaty formation does not promote new investment, contrary to the common expectation. For certain specifications we find that treaty formation may actually reduce investment as predicted by arguments suggesting treaties are intended to reduce tax evasion rather than promote foreign investment.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8834.

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Date of creation: Mar 2002
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Publication status: published as Bruce A. Blonigen & Ronald B. Davies, 2004. "The Effects of Bilateral Tax Treaties on U.S. FDI Activity," International Tax and Public Finance, Springer, vol. 11(5), pages 601-622, 09.
Handle: RePEc:nbr:nberwo:8834

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Cited by:
  1. Niels Johannesen & Gabriel Zucman, 2014. "The End of Bank Secrecy? An Evaluation of the G20 Tax Haven Crackdown," American Economic Journal: Economic Policy, American Economic Association, American Economic Association, vol. 6(1), pages 65-91, February.
  2. Anicic, Jugoslav & Laketa, Marko & Radovic, Branka & Radovic, Dragan & Laketa, Luka, 2012. "Tax Policy Of Serbia In The Function Of Developing The Economic System," UTMS Journal of Economics, University of Tourism and Management, Skopje, Macedonia, University of Tourism and Management, Skopje, Macedonia, vol. 3(1), pages 33-43.
  3. Ronald B. Davies, 2003. "Tax Treaties, Renegotiations, and Foreign Direct Investment," University of Oregon Economics Department Working Papers, University of Oregon Economics Department 2003-14, University of Oregon Economics Department, revised 10 Jun 2003.
  4. Isil Erel & Rose C. Liao & Michael S. Weisbach, 2009. "World Markets for Mergers and Acquisitions," NBER Working Papers 15132, National Bureau of Economic Research, Inc.
  5. Agnès Bénassy-Quéré & Nicolas Gobalraja & Alain Trannoy, 2007. "Tax and public input competition," Economic Policy, CEPR;CES;MSH, CEPR;CES;MSH, vol. 22, pages 385-430, 04.
  6. Ronald B Davies & Pehr-Johan Norbäck & Ayça Tekin-Koru, 2007. "The Effect of Tax Treaties on Multinational Firms: New Evidence from Microdata," Working Papers, Oxford University Centre for Business Taxation 0721, Oxford University Centre for Business Taxation.
  7. Joseph Daniels & Walid Hejazi & Marc von der Ruhr, 2005. "Regional vs. Global Financing Strategies for U.S. MNEs," Working Papers and Research, Marquette University, Center for Global and Economic Studies and Department of Economics 0511, Marquette University, Center for Global and Economic Studies and Department of Economics.
  8. Philip Lane & Gian Maria Milesi-Ferretti, 2005. "International Investment Patterns," The Institute for International Integration Studies Discussion Paper Series, IIIS iiisdp024, IIIS.
  9. Kim, Sokchea, 2006. "Bilateral Investment Treaties, Political Risk and Foreign Direct Investment," MPRA Paper 21324, University Library of Munich, Germany.
  10. Agnès Bénassy-Quéré & Lionel Fontagné & Amina Lahrèche-Révil, 2005. "How Does FDI React to Corporate Taxation?," International Tax and Public Finance, Springer, Springer, vol. 12(5), pages 583-603, September.

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