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Tax competition’s role in economic development


  • Zakariya Chabani

    (Istanbul University, Social Sciences Inst, Economics Faculty)

  • Mona Hamed

    (Istanbul University, Social Sciences Inst, Economics Faculty)


Many theories of tax competition views that competition leads to inefficiently low tax rates and public expenditure levels. However, more recently other theories have been done in order to investigate the desirable effects of tax competition. Such as the benefices of raising total tax intake due to low corporate tax rates stimulating economic growth. Tax competition in Europe is a little bit different from international tax competition because we have to take in consideration the behavior of economic agents and public institutions in a specific geographic, political, economic and legal setting. This paper describes some approaches to extract the potential benefits of tax competition in order to develop European economy; we will see how tax competition handles inefficiencies in both the private sector and the public sector in Europe. We will also discuss how tax competition effects may represent important changes in the distribution of income.

Suggested Citation

  • Zakariya Chabani & Mona Hamed, 2015. "Tax competition’s role in economic development," EY International Congress on Economics II (EYC2015), November 5-6, 2015, Ankara, Turkey 202, Ekonomik Yaklasim Association.
  • Handle: RePEc:eyd:cp2015:202

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    References listed on IDEAS

    1. Kevin A. Hassett & Alex Brill, 2007. "Revenue-Maximizing Corporate Income Taxes," AEI Economics Working Papers 49742, American Enterprise Institute.
    2. Andrea Bassanini & Stefano Scarpetta, 2003. "The Driving Forces of Economic Growth: Panel Data Evidence for the OECD Countries," OECD Economic Studies, OECD Publishing, vol. 2001(2), pages 9-56.
    3. Terry Arthur, 2003. "Tax and the division of labour," Economic Affairs, Wiley Blackwell, vol. 23(1), pages 7-10, March.
    4. Günther G. Schulze & Heinrich W. Ursprung, 1999. "Globalisation of the Economy and the Nation State," The World Economy, Wiley Blackwell, vol. 22(3), pages 295-352, May.
    5. James R. Hines Jr., 2005. "Do Tax Havens Flourish?," NBER Chapters,in: Tax Policy and the Economy, Volume 19, pages 65-100 National Bureau of Economic Research, Inc.
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    Tax Competition; European Economy; Economy Development; Income Distribution;

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