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Impact of foreign direct investment inflows on tax revenues in OECD countries: A panel cointegration and causality analysis

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  • Yilmaz BAYAR

    (Usak University, Turkey)

  • Omer Faruk OZTURK

    (Usak University, Turkey)

Abstract

Globalization process has led considerable increases in the global foreign direct investment flows especially as of mid-1980s. Foreign direct investment inflows have potential to affect economic growth, capital accumulation, human capital, competitiveness, development of finance sector and technological progress in the host country and in turn affects the tax revenues. In this study, we analyzed the relationship among foreign direct investment inflows, economic growth and total tax revenues in 33 OECD countries during 1995-2014 period using Westerlund- Durbin-Hausmann (2008) panel cointegration test and Dumitrescu and Hurlin (2012) panel causality test. We revealed a cointegrating relationship among foreign direct investment inflows, economic growth and total tax revenues Furthermore, there was one-way causality from foreign direct investment inflows to total revenues and bidirectional causality between economic growth and foreign direct investment inflows.

Suggested Citation

  • Yilmaz BAYAR & Omer Faruk OZTURK, 2018. "Impact of foreign direct investment inflows on tax revenues in OECD countries: A panel cointegration and causality analysis," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(1(614), S), pages 31-40, Spring.
    • Handle: RePEc:agr:journl:v:1(614):y:2018:i:1(614):p:31-40
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    References listed on IDEAS

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    8. Hashmat Ali & Wang Qingshi & Irfan Ullah & Zulfiqar Ali, 2017. "How Terrorism Affects Foreign Direct Investment in Pakistan," International Journal of Economics and Financial Issues, Econjournals, vol. 7(3), pages 625-631.
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    Cited by:

    1. Abdramane Camara, 2019. "The effect of foreign direct investment on tax revenue in developing countries," Working Papers hal-03188025, HAL.
    2. Abdramane Camara, 2023. "The Effect of Foreign Direct Investment on Tax Revenue," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 65(1), pages 168-190, March.

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