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Corporate Taxation, Agglomeration and FDI: Firm Level Evidence for Belgium

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  • Tim Goesaert

Abstract

This paper analyzes the sensitivity of Belgian outbound FDI to cor- porate taxation rates and economic clustering. Our approach involves detailed balance sheet data of the foreign aliates as our proxy of FDI and a measure of regional knowledge spillovers as agglomeration variable. The results reveal that investments are sensitive to changes in fiscal policy, with an average tax sensitivity of around -1.5. We also pick up an effect of agglomeration economies: a regional increase in the number of own industry firms dampens tax sensitivity.

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  • Tim Goesaert, 2011. "Corporate Taxation, Agglomeration and FDI: Firm Level Evidence for Belgium," Working Papers VIVES Research Centre for Regional Economics 23, KU Leuven, Faculty of Economics and Business, VIVES Research Centre for Regional Economics.
  • Handle: RePEc:ete:vivwps:23
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