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The Effects of International Competition of Fiscal Incentives on Foreign Direct Investment

Author

Listed:
  • Chen, Jo-Hui

    () (department of Finance , Chung Yuan Chrisitian University)

Abstract

This paper provides evidence on the determinants of foreign direct investment (FDI) inflows from multinationals across the twenty-one host countries over the period 1980 to 1993. We examine the role that fiscal incentives and macroeconomic factors play in explaining FDI inflows. It is shown that countries variation of property taxes, sales taxes, GDP, wages, play a statistically significant role to attract FDI. Interestingly, new technology credit tends to attract more FDI to improve technological capability in Southeast Asian countries. Export credit is an important factor for Latin American countries to enhance export-oriented capacity. Our findings also suggest the policy makers can effectively use regional policy instruments to bring the current FDI to the desired level more easily for host countries in Southeast Asia than for those in Latin America.

Suggested Citation

  • Chen, Jo-Hui, 1998. "The Effects of International Competition of Fiscal Incentives on Foreign Direct Investment," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 51(4), pages 497-516.
  • Handle: RePEc:ris:ecoint:0289
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    References listed on IDEAS

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    1. Peter C. B. Phillips & Bruce E. Hansen, 1990. "Statistical Inference in Instrumental Variables Regression with I(1) Processes," Review of Economic Studies, Oxford University Press, vol. 57(1), pages 99-125.
    2. Phillips, P.C.B., 1986. "Understanding spurious regressions in econometrics," Journal of Econometrics, Elsevier, vol. 33(3), pages 311-340, December.
    3. Lee, Joong-Koon, 1971. "Exports and the Propensity to Save in L.D.C.s," Economic Journal, Royal Economic Society, vol. 81(322), pages 341-351, June.
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    Cited by:

    1. Nigel A Chalk, 2001. "Tax Incentives in The Philippines; A Regional Perspective," IMF Working Papers 01/181, International Monetary Fund.

    More about this item

    JEL classification:

    • F10 - International Economics - - Trade - - - General

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