Do low corporate income tax rates attract FDI? – Evidence from Central- and East European Countries

Journal article | Zeitschriftenartikel

Fifty six bilateral country relationships combining 7 home countries from the EU and the US, and 8 Central and East European host countries (CEECs) of foreign direct investment (FDI) from 1995-2003 are used in a panel gravity-model setting to estimate the role of taxation as a determinant of FDI. While gravity variables explain most of the variation of FDI inflows, the bilateral effective average tax rate (beatr) is roughly equally important to other cost-related factors. The semi-elasticity of FDI with respect to taxation is about -4.3. This is above those of earlier studies in absolute terms and can partly be attributed to using the beatr instead of the statutory tax rate. Our results indicate that tax-lowering strategies of CEEC governments seem to have an important impact on foreign firms’ location decisions.

Object Details

• Extent: Seite(n): 2691-2703
• Language: Englisch
• Notes: Status: Postprint; begutachtet (peer reviewed)

References and Relationships

• Bibliographic citation: Applied Economics, 41(21)

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bellak, Christian ; Leibrecht, Markus
• Event: Veröffentlichung
• (when): 2009

Further information

• DOI: https://doi.org/10.1080/00036840701320217
• URN: urn:nbn:de:0168-ssoar-240754
• Rights: GESIS - Leibniz-Institut für Sozialwissenschaften. Bibliothek Köln
• Last update: 21.06.2024, 4:27 PM CEST