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The Annals of Regional Science

, Volume 42, Issue 2, pp 413–423 | Cite as

Foreign direct investment, industrial location and capital taxation

  • Luis Lanaspa
  • Fernando Pueyo
  • Fernando Sanz
Original Paper

Abstract

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 Classification

F21 H73 R12 

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Copyright information

© Springer-Verlag 2007

Authors and Affiliations

  1. 1.Departamento de Análisis EconómicoUniversidad de ZaragozaZaragozaSpain
  2. 2.Facultad de Ciencias EconómicasUniversidad de ZaragozaZaragozaSpain

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