IDEAS home Printed from https://ideas.repec.org/a/oup/wbecrv/v39y2025i3p663-683..html

Does the Source of FDI Matter? The Case of Tax Havens

Author

Listed:
  • Solomiya Shpak

Abstract

This paper estimates the benefits of FDI for firm performance, differentiating source countries between tax havens and non-tax havens. Using longitudinal data on more than 300,000 initially domestic firms in Ukraine between 1999 and 2013 and employing propensity score matching and panel data methods, this study finds that firms acquired by non-tax haven foreign investors experience substantial increases in employment, productivity, exports, and wages, but the gains are much lower and shorter-lived for firms receiving FDI from tax havens. These findings, based on econometric analysis of nearly the universe of Ukrainian businesses, are consistent with macroeconomic studies and anecdotal evidence that much of the tax-haven FDI in Ukraine actually represents domestic ownership channeled through offshore companies. This “round-trip FDI” results in negligible effects on firm performance and, at a macro level, it overstates the amount of genuine FDI flows into Ukraine.

Suggested Citation

  • Solomiya Shpak, 2025. "Does the Source of FDI Matter? The Case of Tax Havens," The World Bank Economic Review, World Bank, vol. 39(3), pages 663-683.
    • Handle: RePEc:oup:wbecrv:v:39:y:2025:i:3:p:663-683.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/wber/lhae036
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    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:oup:wbecrv:v:39:y:2025:i:3:p:663-683.. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://edirc.repec.org/data/wrldbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.