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FDI Investment Incentive System and FDI Inflows : The Philippine Experience

Author

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  • Rafaelita M. Aldaba

    (PIDS)

Abstract

This paper examines the countrys investment incentive program for foreign investors and its success in attracting substantial FDI inflows. The analysis compares the FDI incentive system and FDI performance of the Philippines with other Asian countries. Since it is difficult to untangle the effect of tax incentives from other factors, the analysis also takes into account other factors such as level of competitiveness, costs of doing business and availability of infrastructure.Our experience tends to suggest that in the absence of fundamental factors such as economic conditions and political climate, tax incentives alone are not enough to generate a substantial effect on investment decisions of investors nor can they compensate for the eficiencies in the investment environment.

Suggested Citation

  • Rafaelita M. Aldaba, 2006. "FDI Investment Incentive System and FDI Inflows : The Philippine Experience," Finance Working Papers 22335, East Asian Bureau of Economic Research.
  • Handle: RePEc:eab:financ:22335
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    References listed on IDEAS

    as
    1. Louis T., Jr. Wells & Nancy J. Allen & Jacques Morisset & Neda Pirnia, 2001. "Using Tax Incentives to Compete for Foreign Investment : Are They Worth the Costs?," World Bank Publications, The World Bank, number 13979.
    2. Robert J Rolfe & David A Ricks & Martha M Pointer & Mark McCarthy, 1993. "Determinants of FDI Incentive Preferences of MNEs," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, pages 335-355.
    3. Blomström, Magnus & Kokko, Ari, 2003. "The Economics of Foreign Direct Investment Incentives," EIJS Working Paper Series 168, The European Institute of Japanese Studies.
    4. Blomström, Magnus & Kokko, Ari, 2003. "The Economics of Foreign Direct Investment Incentives," EIJS Working Paper Series 168, Stockholm School of Economics, The European Institute of Japanese Studies.
    5. Hines, James R, Jr, 1996. "Altered States: Taxes and the Location of Foreign Direct Investment in America," American Economic Review, American Economic Association, pages 1076-1094.
    6. Gordon H. HANSON, 2001. "Should Countries Promote Foreign Direct Investment?," G-24 Discussion Papers 9, United Nations Conference on Trade and Development.
    7. Benjamin E. Diokno, 2005. "Reforming the Philippine Tax System: Lessons from Two Tax Reform Programs," UP School of Economics Discussion Papers 200502, University of the Philippines School of Economics.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Mari-Len Reyes-Macasaquit, 2008. "Industrial Agglomeration in the Philippines," Development Economics Working Papers 22690, East Asian Bureau of Economic Research.
    2. Alexander D Klemm & Dennis P Botman & Reza Baqir, 2008. "Investment Incentives and Effective Tax Rates in the Philippines; A Comparison With Neighboring Countries," IMF Working Papers 08/207, International Monetary Fund.
    3. International Monetary Fund, 2012. "Philippines; Technical Assistance Report on Road Map for a Pro-Growth and Equitable Tax System," IMF Staff Country Reports 12/60, International Monetary Fund.
    4. Macasaquit, Mari-Len R., 2008. "Industrial Agglomeration in the Philippines," Discussion Papers DP 2008-14, Philippine Institute for Development Studies.
    5. Aldaba, Rafaelita M., 2014. "Investment Liberalization and Facilitation Toward AEC 2015," Philippine Journal of Development PJD 2012 Vol. 39 Nos. 1-2, Philippine Institute for Development Studies.
    6. Philippine Institute for Development Studies, 2008. "Industrial Agglomeration and Industrial Policies : The Philippine Experience," Development Economics Working Papers 22681, East Asian Bureau of Economic Research.

    More about this item

    Keywords

    foreign direct investment; corporate taxation; investment incentives;

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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