Title: Corporate taxation and bilateral FDI with threshold barriers
First published: 2005
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.
Subjects: Corporations, Econometric models, Foreign Investments, Investments, Foreign, Mathematical models, Taxation
LC classification: HB1