Does Corruption Relieve Foreign Investors of the Burden of Taxes and Capital Controls?
In: International Taxation and Multinational Activity
In a sample of fourteen source countries making bilateral investments in forty five countries, the author finds that taxes, capital controls, and corruption, all have large, statistically significant negative effects on foreign investment. Moreover, there is no robust support in the data for the"efficient grease"hypothesis - that corruption helps attract foreign investment by reducing firms'tax burden and the irritant of capital controls.
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