IDEAS home Printed from https://ideas.repec.org/a/kap/itaxpf/v14y2007i5p543-562.html
   My bibliography  Save this article

Do tax sparing agreements contribute to the attraction of FDI in developing countries?

Author

Listed:
  • Céline Azémar

    ()

  • Rodolphe Desbordes
  • Jean-Louis Mucchielli

Abstract

Measuring the effects of taxation on FDI in developing countries requires consideration of the tax sparing provision. This provision signed between developed and developing countries protects host country fiscal incentives for FDI. This paper estimates the impact of tax sparing provisions on Japanese outbound FDI between 1989 and 2000. We find evidence that the tax sparing provision influences positively the location of Japanese FDI, even after having taken into account reversal causality.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Céline Azémar & Rodolphe Desbordes & Jean-Louis Mucchielli, 2007. "Do tax sparing agreements contribute to the attraction of FDI in developing countries?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 14(5), pages 543-562, October.
  • Handle: RePEc:kap:itaxpf:v:14:y:2007:i:5:p:543-562
    DOI: 10.1007/s10797-006-9005-9
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s10797-006-9005-9
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Assaf Razin & Joel Slemrod, 1990. "Taxation in the Global Economy," NBER Books, National Bureau of Economic Research, Inc, number razi90-1, January.
    2. Head, Keith & Ries, John & Swenson, Deborah, 1995. "Agglomeration benefits and location choice: Evidence from Japanese manufacturing investments in the United States," Journal of International Economics, Elsevier, vol. 38(3-4), pages 223-247, May.
    3. Young, Kan H., 1988. "The Effects of Taxes and Rates of Return on Foreign Direct Investment in the United States," National Tax Journal, National Tax Association;National Tax Journal, vol. 41(1), pages 109-121, March.
    4. Hall, Alastair R & Rudebusch, Glenn D & Wilcox, David W, 1996. "Judging Instrument Relevance in Instrumental Variables Estimation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(2), pages 283-298, May.
    5. Jan Willem Gunning & Paul Collier, 1999. "Explaining African Economic Performance," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 64-111, March.
    6. Jason Cummins & R. Glenn Hubbard, 1995. "The Tax Sensitivity of Foreign Direct Investment: Evidence from Firm-Level Panel Data," NBER Chapters,in: The Effects of Taxation on Multinational Corporations, pages 123-152 National Bureau of Economic Research, Inc.
    7. Masahiro Kawai & Shinji Takagi, 2004. "Japan's official development assistance: recent issues and future directions," Journal of International Development, John Wiley & Sons, Ltd., vol. 16(2), pages 255-280.
    8. Hines, James R, Jr, 1996. "Altered States: Taxes and the Location of Foreign Direct Investment in America," American Economic Review, American Economic Association, vol. 86(5), pages 1076-1094, December.
    9. de Mooij, Ruud A & Ederveen, Sjef, 2003. "Taxation and Foreign Direct Investment: A Synthesis of Empirical Research," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 10(6), pages 673-693, November.
    10. Grubert, Harry & Mutti, John, 1991. "Taxes, Tariffs and Transfer Pricing in Multinational Corporate Decision Making," The Review of Economics and Statistics, MIT Press, vol. 73(2), pages 285-293, May.
    11. Theodore H. Moran & Edward M. Graham & Magnus Blomstrom, 2005. "Does Foreign Direct Investment Promote Development?," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 3810.
    12. Bruce A. Blonigen & Ronald B. Davies, 2004. "The Effects of Bilateral Tax Treaties on U.S. FDI Activity," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 11(5), pages 601-622, September.
    13. Bruce A. Blonigen & Miao Wang, 2004. "Inappropriate Pooling of Wealthy and Poor Countries in Empirical FDI Studies," NBER Working Papers 10378, National Bureau of Economic Research, Inc.
    14. Joel B. Slemrod, 1990. "Tax Effects on Foreign Direct Investment in the United States: Evidence from a Cross-Country Comparison," NBER Chapters,in: Taxation in the Global Economy, pages 79-122 National Bureau of Economic Research, Inc.
    15. Michael Devereux & Harold Freeman, 1995. "The impact of tax on foreign direct investment: Empirical evidence and the implications for tax integration schemes," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 2(1), pages 85-106, February.
    16. Michael J. Boskin & William G. Gale, 1987. "New Results on the Effects of Tax Policy on the International Location of Investment," NBER Chapters,in: The Effects of Taxation on Capital Accumulation, pages 201-222 National Bureau of Economic Research, Inc.
    17. Young, Kan H., 1988. "The Effects of Taxes and Rates of Return on Foreign Direct Investment in the United States," National Tax Journal, National Tax Association, vol. 41(1), pages 109-21, March.
    18. Murthy, N.R. Vasudeva, 1989. "The Effects of Taxes and Rates of Return on Foreign Direct Investment in the United States: Some Econometric Comments," National Tax Journal, National Tax Association, vol. 42(2), pages 205-07, June.
    19. Alexander Lehmann, 2002. "Foreign Direct Investment in Emerging Markets; Income, Repatriations and Financial Vulnerabillities," IMF Working Papers 02/47, International Monetary Fund.
    20. Murthy, N.R. Vasudeva, 1989. "The Effects of Taxes and Rates of Return on Foreign Direct Investment in the United States: Some Econometric Comments," National Tax Journal, National Tax Association;National Tax Journal, vol. 42(2), pages 205-207, June.
    21. Baltagi, Badi H., 1981. "Simultaneous equations with error components," Journal of Econometrics, Elsevier, vol. 17(2), pages 189-200, November.
    22. Devereux, Michael P. & Griffith, Rachel, 1998. "Taxes and the location of production: evidence from a panel of US multinationals," Journal of Public Economics, Elsevier, vol. 68(3), pages 335-367, June.
    23. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119.
    24. James R. Hines & Eric M. Rice, 1994. "Fiscal Paradise: Foreign Tax Havens and American Business," The Quarterly Journal of Economics, Oxford University Press, vol. 109(1), pages 149-182.
    25. Forestier, Emmanuel & Grace, Jeremy & Kenny, Charles, 2002. "Can information and communication technologies be pro-poor?," Telecommunications Policy, Elsevier, vol. 26(11), pages 623-646, December.
    26. Baltagi, Badi H. & Wu, Ping X., 1999. "Unequally Spaced Panel Data Regressions With Ar(1) Disturbances," Econometric Theory, Cambridge University Press, vol. 15(06), pages 814-823, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ronald B. Davies & Pehr-Johan Norbäck & Ayça Tekin-Koru, 2009. "The Effect of Tax Treaties on Multinational Firms: New Evidence from Microdata," The World Economy, Wiley Blackwell, vol. 32(1), pages 77-110, January.
    2. Céline Azémar & Andrew Delios, 2007. "The Tax Sparing Provision Influence: A Credit versus Exempt Investors Analysis," Working Papers 2007_31, Business School - Economics, University of Glasgow.
    3. Alexander Klemm & Stefan Parys, 2012. "Empirical evidence on the effects of tax incentives," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(3), pages 393-423, June.
    4. Céline Azemar & Grégory Corcos & Andrew Delios, 2006. "Taxation and the international strategy of Japanese multinational enterprises," Working Papers halshs-00590421, HAL.
    5. repec:eee:riibaf:v:42:y:2017:i:c:p:630-644 is not listed on IDEAS
    6. Azémar, Céline & Delios, Andrew, 2008. "Tax competition and FDI: The special case of developing countries," Journal of the Japanese and International Economies, Elsevier, vol. 22(1), pages 85-108, March.
    7. Céline Azémar, 2010. "International corporate taxation and U.S. multinationals' behaviour: an integrated approach," Canadian Journal of Economics, Canadian Economics Association, vol. 43(1), pages 232-253, February.
    8. Kiyoyasu Tanaka, 2009. "Re-estimating the Knowledge-Capital Model: Evidence from Japanese and US Multinational Enterprises," Global COE Hi-Stat Discussion Paper Series gd09-087, Institute of Economic Research, Hitotsubashi University.
    9. Céline Azemar & Grégory Corcos & Andrew Delios, 2006. "Taxation and the international strategy of Japanese multinational enterprises," PSE Working Papers halshs-00590421, HAL.

    More about this item

    Keywords

    Foreign direct investment; Tax sparing; International taxation;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:itaxpf:v:14:y:2007:i:5:p:543-562. 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: (Sonal Shukla) or (Rebekah McClure). General contact details of provider: http://www.springer.com .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.