Foreign direct investment, industrial location and capital taxation
- 78 Downloads
This paper demonstrates from a theoretical point of view that governments can affect the location decision of firms using tax rate on capital income as a policy instrument. We find that, in general, countries with a lower tax burden are net receivers of foreign direct investment. Furthermore, fiscal pressure interacts with the quality of infrastructures to exert a combined influence on the equilibrium location of the firms.
JEL ClassificationF21 H73 R12
Unable to display preview. Download preview PDF.
- Baldwin RE, Forslid R, Martin P, Ottaviano G and Robert-Nicoud F (2003). Economic geography and public policy. Princeton University Press, New Jersey Google Scholar
- Boskin MJ, Gale WG (1987) New results on the effects of tax policy on the international location of investment. In: Feldstein M (ed) The effects of taxation on capital accumulation. University of Chicago Press, ChicagoGoogle Scholar
- Hartman DG (1984). Tax policy and foreign direct investment in the US. Natl Tax J 37: 475–488 Google Scholar
- Lanaspa L, Pueyo F and Sanz F (2004). The provision of public services and industrial location. Ann Écon Stat 73: 181–198 Google Scholar
- Slemrod J (1990) Tax effects of foreign direct investment in the United States: Evidence from a cross-country comparison. In: Razin A, Slemrod J (eds) Taxation in the global economy. University of Chicago Press, ChicagoGoogle Scholar