IDEAS home Printed from
   My bibliography  Save this article

Property Rights, Tax Incentives and Bogus FDI


  • Haozhen Zhang

    () (Health Canada)


To our knowledge, this paper provides the first evidence of the effects of FDI round-tripping incentives on the scale of round-tripping. We find that round-tripping could be an explanation for the data reporting discrepancies between FDI host and source countries since investors have no incentive to report their ¡°bogus¡± foreign investment to their source countries. If the data reporting discrepancies were caused partly by round-tripping, those reporting differences should be correlated with round-tripping incentives. Therefore, we first calculate the difference between the FDI inflows from 10 source regions reported by 50 host countries and FDI outflows reported by these 10 source regions. Second, these reporting differences are regressed on measures of the host countries¡¯ political stability, property rights protection and preferential fiscal incentives to foreign investment. Our results from both aggregate and disaggregated data show that the FDI reporting differences are positively related to the host countries¡¯ preferential fiscal incentives, and negatively correlated with the host country¡¯s property rights protection and political stability. These results are statistically significant and robust to different function specifications and different indicators for property rights protection.

Suggested Citation

  • Haozhen Zhang, 2012. "Property Rights, Tax Incentives and Bogus FDI," Transnational Corporations Review, Ottawa United Learning Academy, vol. 4(4), pages 19-45, December.
  • Handle: RePEc:oul:tncr09:v:4:y:2012:i:4:p:19-45

    Download full text from publisher

    File URL:
    Download Restriction: no


    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:oul:tncr09:v:4:y:2012:i:4:p:19-45. 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: (Denny Liao) or (Jen Ma). General contact details of provider: .

    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.

    We have no references for this item. You can help adding them by using 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.