FDI Determinants in Southeast European Countries with Special Reference to Tax Incentives
As Southeast European countries have become much more attractive for foreign investors since 2000, this paper analyses factors that have influenced FDI inflows in these economies. There is a broad consensus that, regardless of the type of FDI, the most important FDI determinants include market size, prospects for market growth, the degree of development of host countries and the progress made in the process of transition, especially progress in institutional development. Still, the specific FDI determinant in SEECs has been the privatization process, especially that of large-scale state assets. The assessment of the impact of tax incentives on FDI is evolving - showing increasing evidence that tax incentives in their broadest sense could have a significant impact on the pattern of regional FDI. The effects of incentives are likely to be particularly strong in the competition for FDI within regions, when the initial investment decision has been taken and the investor is choosing between alternative locations in a given region. In such circumstances, taxes will start to play an important role, especially corporate income tax. Its tax rate is of crucial importance and will play a major role in attracting investment. Accelerated depreciation and tax credits (allowances) for investment are even more cost efficient and could be seen as a good supplement to the former major factor. Tax holidays should be avoided. Countries should also consider lengthening loss carry forward and withholding taxes on direct dividends.
If 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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): (2006)
Issue (Month): 3 ()
|Contact details of provider:|| Postal: 3, Aksakov Str., 1040, Sofia|
Phone: (+359 2) 810 40 18
Fax: (+359 2) 988 21 08
Web page: http://www.iki.bas.bg
More information through EDIRC
References listed on IDEAS
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.:
- Kai Carstensen & Farid Toubal, 2003.
"Foreign Direct Investment in Central and Eastern European Countries: A Dynamic Panel Analysis,"
Kiel Working Papers
1143, Kiel Institute for the World Economy.
- Carstensen, Kai & Toubal, Farid, 2004. "Foreign direct investment in Central and Eastern European countries: a dynamic panel analysis," Journal of Comparative Economics, Elsevier, vol. 32(1), pages 3-22, March.
- Kai Carstensen & Farid Toubal, 2004. "Foreign Direct Investment in Central and Eastern European Countries: A Dynamic Panel Analysis," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00311585, HAL.
- Carstensen, Kai & Toubal, Farid, 2004. "Foreign direct investment in Central and Eastern European countries: A dynamic panel analysis," Munich Reprints in Economics 19965, University of Munich, Department of Economics.
- Carstensen, Kai & Toubal, Farid, 2003. "Foreign Direct Investment in Central and Eastern European Countries: A Dynamic Panel Analysis," Kiel Working Papers 1143, Kiel Institute for the World Economy (IfW).
- Nada Mora & Ratna Sahay & Jeronimo Zettelmeyer & Pietro Garibaldi, 2002.
"What Moves Capital to Transition Economies?,"
IMF Working Papers
02/64, International Monetary Fund.
When requesting a correction, please mention this item's handle: RePEc:bas:econst:y:2006:i:3:p:34-57. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Diana Dimitrova)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.