Corporate taxation and bilateral FDI with threshold barriers
By: Assaf Razin, Yona Rubinstein, Efraim Sadka.
Contributors: Rubinstein, Yona, 1962-; Sadka, Efraim.; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 11196; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 11196.
Publisher: National Bureau of Economic Research
Published: 2005
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Investments, Foreign -- Mathematical models.; Corporations -- Taxation -- Mathematical models.
Description: "The paper brings out the special mechanism through which taxes influence bilateral FDI, when investment decisions are two-fold in the presence of fixed setup flows costs.  For each pair of source-host countries, there is a set of factors determining whether aggregate FDI flows will occur at all, and a different set of factors determimnig the volume of FDI flows (provided that they occur).  We demonstrate that the notion that the mere international tax differetials are a key factor behind the direction and magnitude of FDI flows is too simple.  We argue that the source country tax rate works primarely on the selection process, whereas the host-country tax rate affect mainly the magnitude of the FDI, once they occur.  We analyze international panel data with 24 OECD countries over the period 1981-1998 by the Heckman selection method to bring evidence in support of this argument"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
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